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The Contract of Sale (“C/S”)Components of the Contract of SaleIntroductions. 73: C/L (MacDougall: and equity) is preserved unless modified by the Act.s. 6(1): seller (agrees to) transfer(s) property in goods to buyer for monetary consideration, (i.e. ‘price’.) There are accordingly 2 types of C/S:Sale, (s. 6(4),) incl. agreements to sell whose conditions/time limits have been fulfilled/elapsed (s. 6(6).)Agreement to sell, (s. 6(5),) incl. ‘present sales of future goods’, (s. 9(3).)PartiesThe parties are ‘buyer’ and ‘seller’, (s. 1)Privity generally applies:Lyons: C, glass bottle donee, could not sue when they were injured when it smashed. Bottle purchased from B by A. Definition of ‘parties’ is narrow, certain provinces have modified privity by legislation, Ontario applies traditional privity, and the agency exception, (e.g. The Eurymedon,) does not apply.Chabot: A bought car from B. A could sue C, manufacturer, b/c B’s warranty to A included an “independent warranty” from C that B would replace defective part, (which B failed to do) [151].Unless the London Drugs exception, (did (i) A and B intend to confer benefit on C, and (ii) C perform an act contemplated by A and B?) applies:Fraser River Pile & Dredge: A and B’s C/P prevented subrogation where i/a charterers are sued. C, charterer, ran B’s ship aground and could rely on that clause against A, insurer: the clause (i) was intended to confer a benefit on C, and (ii) C was chartering ship, exactly as A and B contemplated.Some jurisdictions have modified privity in the sale of goods context:USA, (Hennigen): Car manufactured by C, dealt by B, sold to A, and given to D was defective. D could sue C. ‘Social justice’ requires privity relaxation between A and C. D was in C’s warranty’s ‘reasonable contemplation’, so relaxation happened there, too.Quebec (Kravitz): Vendor-manufacturers are presumed to know of latent defects so are liable to buyers directly per Arts. 1028-1031 CCQ, even if e.g. car sold by specialized vendor.s. 7(2): Capacity is regulated by ‘general law’ unless C/S is for necessities, (upon which buyer must pay ‘reasonable price’ —?s. 7(3).)Ross: Buyer’s drunkenness rendered his C/S for purchase of grain voidable. This was lost by waiting 1 mo/ to rescind, (buyer was actually speculating in grain futures.)AgreementOffer, acceptance, and intention to create legal relations are required, (clearly…)s. 8: No formalities, (e.g. writing,) are required unless modified by other Acts e.g. BPCPA, (ss. 19-21 & 46-49.)Passage of PropertyProperty: “general property in goods”, (i.e. MacDougall: ‘ownership’)Brogan: unhelpfully vague given BCSGA covers certain forms of leases, (e.g. Lee.)GoodsGoods (s. 1): Non-exhaustive. Includes (a) chattels, (therefore land is excluded a fortiori) personal except choses in action and (b) growing crops, (whether industrial or natural, thereby expanding C/L per MacDougall) and things attached to but agreed to be severed from the land.C/L expansions under s. 1(b)CaseSubject MatterGood?OutcomeFredkinGrass, (natural fruit.) A ‘hay privilege.’Yes At C/L, this is an interest in land but MB intentionally changed {s. 1(b)}.Privilege was licence coupled w/ interest cf. bare licence.Carlson Trees, (natural fruit)No, there was no deadline to remove trees, (cf. Fredkin).therefore disponee could sue licencees’ heirs in trespass b/c interest in land not registered.Brogan: Carlson is binding BC authority so inaccurate to suggest C/L has been modifiedMacDougall: One should prefer Fredkin b/c the statutory wording change was deliberate.Characterizing Goods:Goods can be existing, (s. 9: owned or possessed by seller) or future (s. 1: to be manufactured or acquired by seller after C/S’s conclusion)Goods can be specific, (s. 1: identified and agreed upon at time of C/S), unascertained, (not defined but is e.g. ‘one cow in my field’,) and ascertained, (not defined, but the rules for ascertainment are prescribed in s. 23(7).)Brogan: Better to have some indication of what unascertained goods are, (e.g. s. 61 UKSGA —?specific goods include a fraction of a whole e.g. ? the grain ex Peerless.)Prices. 12(1): Parties set price (a) in C/S, (b) in future, or (c) by course of dealingIf (b) provides for TP to set price, C/S is void (s. 13(1),) where TP cannot set price. If part delivery has occurred, it’s not void and buyer must pay ‘reasonable price’, (s. 13(2).)s. 12(2) If Parties fail to set a price, buyer must pay ‘reasonable price’, (e.g. Gates,) assessed by reference to “surrounding circumstances”, (S. 12(3).)Gates: Parties’ C/S interpreted as a C/S to sell whichever grain seller grew in field, with parties setting price per {s. 12(1)(a)} for only Grade 1 grain. When, therefore, seller grew Grade 3 grain and sold it to TP, they breached their delivery obligation and buyer could sue for damages {s. 54}The price must be ‘money or money’s worth’, (Christner) cf. barter.CaseConsid.?C/S?ChristnerPiano + $500No: piano value not set.MessengerPulpwoodYes: value was approx. that of store bill. Action for price successful.Is the C/S void ab initio?Two provisions are crucial: ss. 10 and 11.s. 10: ‘Mistake’ provisions. 10: “A [C/S] for specific goods is void if, w/o [seller’s knowledge], the goods have perished at time of C/S.”2314915296To what extent is Couturier v Hastie modified?Couturier: fob was void b/c both parties contemplated something, (corn of average quality) which did not exist at time of sale, (corn sold at intermediate port before C/S conclusion.)Peel, Nolan: This is a distinct exception from {s. 10 BCSGA}.MacDougall: Couturier, following McRae, is better viewed as a case about contractual interpretation. It is not it’s own exception; the only exception is s. 10.0To what extent is Couturier v Hastie modified?Couturier: fob was void b/c both parties contemplated something, (corn of average quality) which did not exist at time of sale, (corn sold at intermediate port before C/S conclusion.)Peel, Nolan: This is a distinct exception from {s. 10 BCSGA}.MacDougall: Couturier, following McRae, is better viewed as a case about contractual interpretation. It is not it’s own exception; the only exception is s. 10.s. 11: ‘Frustration’ provisions. 11: “If there is an agreement to sell specific goods, and subsequently the goods, w/o any fault on the part of the seller or buyer, perish before risk passes to the buyer, the agreement is avoided.”Contract of Sale as distinct from other ContractsLeasesHelby: Depends on the “true effect of the agreement,” cf. form. Where a lease imposes a “legal obligation to buy”, it will be a C/S ab initio.Lee: Hire-purchase agreement, where on payment of 2nd installment, prop passed to hirer, was C/S ab initio. Therefore, lessor’s assignee couldn’t sue hirer’s purchaser. The hirer was a buyer in possession.Helby: The “true effect” of the lease of a piano with the option to purchase at the end was a lease. Therefore M, pledgee, could be sued in trover by O, lessor.Labour and MaterialsDistinction turns on contract’s “essential characteristics” (Gee) or “substance”, (Robinson)CaseFactsC/S?Why?NBRobinsonCommissioned painting wasn’t paid for.NoContract to “exercise skill”; passage of prop in paint was “ancilliary”.The agreement need not be written, (cf. s. 17 Statute of Frauds) therefore action for price successful.Young & MartenRoofers installed defective tilesNoIrrelevant b/c a ‘merchantable quality’-like obligation aroseThe distinction is “very fine”. Not protecting innocent party is “most unsatisfactory” (Upjohn)InghamC’s hair dyed in salonNoGeeC was poisoned in D’s restaurantYesC/S is for “finished products”.This is binding authority in BC, (cf. other cases.)AgencyWeiner: substance, (cf. form) of entrustment transaction was “textbook agency”: M owed O duty to sell, was remunerated, and only had to account to O if sale was made. P therefore took good title under {s. 59(1) BCSGA}.ConsignmentRe Stephanian: Parties relationship was consignment, (cf. C/S) given their conduct and written agreement, (consignee insures but need not by rugs and holds profit on trust for consignor.) Property did not pass to consignee, therefore on consignee’s insolvency, consignor could argue carpets could be taken out of asset pool, given they weren’t intended as security under PPSA. Risk and Passage of PropertyIntroductionPassage of property and risk are coupled, (s. 25(1).) If risk has passed to buyer before calamity ensues, don’t sue.-162190246380Jerome: Specific car needed to be put in deliverable state. This was done but buyer was not notified before the car was destroyed by fire. Buyer did not breach payment obligation because payment and transfer of permit were insufficient to evidence intent, {s. 22} to modify default rules {s. 23(2),} Minority interpreted the facts differently and found contrary intent.0Jerome: Specific car needed to be put in deliverable state. This was done but buyer was not notified before the car was destroyed by fire. Buyer did not breach payment obligation because payment and transfer of permit were insufficient to evidence intent, {s. 22} to modify default rules {s. 23(2),} Minority interpreted the facts differently and found contrary intent.Passage of property also allows proprietor to benefit from certain rights and accrue certain liabilitiesRightsLiabilitiesSue in conversion, (e.g. Federspiel)Liable for price, (s. 52(1) + Sells)Enjoy rights on insolvency, (e.g. Colley.)Liable regulatory, (cf. Isaak)Isaak: Prop. passed in unascertained U-Brew kit when it was taken off the wall by the employee. Hence, property passed before the grapes and yeast were wine. To hold otherwise would ascribe a parties’ intent to break the law. Hence, D’s lease and BC Regulations were not breached.Passage of Propertys. 21: Property cannot pass in unascertained goods.Brogan: Reform per s. 20A UKSGA, (prop in unascertained goods passes proportionately to amount paid.) Nolan: Benjamin’s concerns, (lack of seller security for payment of whole cp. Cuidad de Pesto) irrelevant b/c property passes proportionately. s. 22(1): Property in specific and ascertained goods passes when parties intend, (adduced by considering C/S’s terms, parties’ conduct, and surrounding circumstances —?s. 22(2).)s. 23 provides default rules for property’s passage where ss. 22 & 24 do not apply.BCSGAComponentsOutcomeJ/P?23(2)Uncondit. C/S and goods are in deliverable state (defined in s. 4, discussed in Jerome)Prop. passes on C/S conclusion; Payment/delivery time irrelevant. Problematic b/c seemingly removes rejection right, (14(5).) Wajakawski was creative response.Kursell: Entire forest was unascertained and would be appropriated once felled, so this s. didn’t apply to prevent the C/S from being frustrated once forest was nationalized.23(3)Seller must make goods deliverable, (defined in s. 4)No prop. passes until (i) made deliverable, and (ii) buyer has noticeThis was why Jerome was not at buyer’s risk: seller failed to put buyer on notice.23(4)Goods in deliverable state must be weighed by sellerNo prop passes until seller puts buyer on notice that goods have been weighed.23(7)Sale by descriptionProp. passes where conforming goods in deliverable state are unconditionally appropriated to C/S w/ other party’s assent.Federspiel: unascertained bikes agreed to be sold fob Liverpool were not appropriated to C/S b/c still had to be taken to docks, (cf. last act); segregation & packaging irrelevant. Therefore buyer couldn’t sue liquidator in conversion on seller’s insolvency.23(8)N/AAssent to appropriation can be express, implied, (e.g. through ordering something e.g. books —?Sells) given in advanceSells: Advance consent can be lost, (e.g. through rejection of 13/25 books after first 12 were delivered.) Seller’s s. 52 suit was unfounded; they should have sued under s. 53.Seller’s Obligations under the C/SIntroductionImplied TermsContractual obligations are express or impliedCP V BMO: Drawer wasn’t prevented from setting up cheque forgeries against drawee (s. 49(1) BEA) and drawee had to reimburse drawer. A duty to prudently examine statements was not implied by custom, (no common intent,) fact, (not necessary to do ‘business efficacy’), or law, (necessity test failed.)BCSGA’s terms are implied by statute.S. 69 BCSGA: they can be varied (a) expressly, (b) by course of dealing, or (c) by usage.Conditions, Warranties, and Innominate TermsTerms are classified based on their effect on breach. Conditions, when breached, allow the innocent party to terminate the contract.; warranties do not. Under both, the innocent party can sue for damages. Innominate terms’ effects depend on whether the breach ‘goes to the root’. If so, the breach is treated as a breach of condition; if not, the breach is treated as a breach of warranty.Term Classification at C/LCaseTermClassificat’n.NBLeaf [C/S]Panting is constableW (Evershed, Jenkins LJJ) cf. C (Denning LJ)Maj: No damages b/c not plead. No rescission b/c unconscionable.Min: No reject’n b/c lost by delay. No damages b/c followed from loss of reject’n.HK Fir [C/P]Ship be seaworthyI (Upjohn, Diplock LJJ) cf. W (Sellers LJ)Seaworthiness breaches range from trivial (nail out of place,) to grave, (mast missing). C/P breach (understaffed, drunk engineer) did not go to root b/c parties contemplated crew change.Hansa Nord [cif]Pellets be in good condition.I (Unanimous EWCA)Breach did not go to root. C bought same pellets from TP months later for same purpose. HK Fir applies universally, (cf. only to C/Ps.)Bunge [fob]Give readiness to load June 12C (Lord Wilberforce)Nomination is condition precedent for buyer to deliver (load goods on board.) Deference given to mercantile parties’ classifications.BCSGA classifies most terms under the statute in this way. S. 15(4) modifies that classification.Seller’s BCSGA ObligationsIntroductionThese obligations are independent from one another:Kendall: Just because goods, (herring meal) not fit for purpose (contaminated + poisonous to mink) does not mean they do not conform to description, (i.e. was not erroneous to describe goods sold as ‘herring meal’), cf. Viscount Dilhorne.s. 16(a): Condition that seller has right to sell good at time of passage of propThis covers two situations:Seller can’t pass property in licit goods b/c they lack legal right, (e.g. seller is thief)Rowland: M purported to sell stolen car to P. P paid M. O took car back, (cf. BC’s ‘market overt’). M breached {s. 16(a) BCSGA} and P could recover consideration paid to M: M did not get what they paid for because P did not have the right to sell.-30480176530Rowland is normatively perplexingScrutton LJ makes two errors: reads into {s. 15(4)} the idea that goods can’t be accepted w/o passage of property, (cf. the statute’s strict wording.) Implies that it terminates the C/S retrospectively, (given payment already made could be recovered,) even though termination usually only ends prospective obligations, (Suisse Atlantique cf. Thorley, Hain.) This sounds like ‘rescission’, which is not written into {s. 16(a)}.A better cause of action is unjust enrichment, (the unjust element being M’s total failure of consideration) —?{s. 16(a)}’s use complicates the matter, but the outcome is correct.Butteworth: P’s letter to M rescinded car C/S, (Rowland). M’s consideration totally failed; P could recover. TP’s debt to O was discharged, so TP became O. New O’s interest ‘fed’ those the other parties’ estoppel: they could not recover under {s. 16(a).}In Butterworth, there was no failure: P got something legally valuable viz. possessory interest, which could be passed down the string sale until O asserted their ‘better interest’. If the parties tried to use {s. 16(a),} they should have failed: the goods were accepted, (cf. Rowland.)0Rowland is normatively perplexingScrutton LJ makes two errors: reads into {s. 15(4)} the idea that goods can’t be accepted w/o passage of property, (cf. the statute’s strict wording.) Implies that it terminates the C/S retrospectively, (given payment already made could be recovered,) even though termination usually only ends prospective obligations, (Suisse Atlantique cf. Thorley, Hain.) This sounds like ‘rescission’, which is not written into {s. 16(a)}.A better cause of action is unjust enrichment, (the unjust element being M’s total failure of consideration) —?{s. 16(a)}’s use complicates the matter, but the outcome is correct.Butteworth: P’s letter to M rescinded car C/S, (Rowland). M’s consideration totally failed; P could recover. TP’s debt to O was discharged, so TP became O. New O’s interest ‘fed’ those the other parties’ estoppel: they could not recover under {s. 16(a).}In Butterworth, there was no failure: P got something legally valuable viz. possessory interest, which could be passed down the string sale until O asserted their ‘better interest’. If the parties tried to use {s. 16(a),} they should have failed: the goods were accepted, (cf. Rowland.)Seller has legal right to pass property but cannot b/c the property is illicit.Niblett: D sold C i/a 1000 cans ‘Nissley sweetened condensed milk’ cif London. Nestlé’s TM was infringed. C was entitled to reject.J Barry Windsor: 3000 lamps sold contravened BC regulations. Law prevented otherwise good sale.Microbeads: TP’s patent was private at time of C/S. Therefore, C could pass prop. to D, who “acquired perfectly good title to the machines,” (Rostill LJ). This case suggests that IP infringement is better dealt with under {s. 16(b) BCSGA}.Normative Evaluation of s. 16(a)Allows buyer to escape bad bargain —?need no breach except this to reject —?but this is contingent upon s. 15(4)’s application/breach being treated as condition, (cf. e.g. Rowland).Seemingly contradicts Act’s freedom of contract thrust, (ss. 22, 69 BCSGA) b/c it’s difficult to contract out of:Sloan: Cl. 4’s exclusion of ‘all conditions/warranties save those expressly contained in manufacturer warranty’ was not sufficiently precisely worded, (after considering words like ‘property’ [76], etc.). Buyer only entitled to damages [82].S. 20(3) BCSGA: If ‘retail’ C/S, any term diminishing this obligation is void, (also applies to s. 16(b) BCSGA).s. 16(b): Warranty that buyer has ‘quiet enjoyment’ of goodA ‘forward-looking’ provision, (Microbeads) cf. e.g. ss. 16(a) and (c).Microbeads: C breached this provision when TP’s patent went public post-C/S, so C’s action for price against D for road painting equipment failed. This section doesn’t require defect to present at time of C/S, (unanimous) unless contrary intent (Pennycuick, Rostill LJ cf. Denning MR) and strong public policy reasons for seller to bear loss, (unanimous)s. 16(c): Warranty that goods are free from TP encumbrancesAssessed at time of C/S (Microbeads, Roskill LJ).s. 17(1): Condition that goods sold by description correspond to descriptionThere is no precise meaning of description; s. 1 fails to define it.Defining DescriptionCaseDefinitionNBFreyEverything said about goods, (cf. e.g. silence about latent defects, which is a C/L rep.)Follows minority (Denning) in Leaf. It follows that representations and terms are exclusive, (cf. Mirfield)TaylorEverything, no matter how minor, said about unascertained, (cf. specific,) goodsModifies C/L b/c some?reps./warr. about unascertained goods are conditions.Varley gives an example of a term (cf. representation): ‘4-year old horse in last stall’ is a term; soundness of that same horse is a representation.The meaning of sale by description is also controversial.Defining ‘Sale by Description’CaseWhen is there sale by descrip.?NBVarleySale of specific goodFacts: Specific reaping machineSale of any unseen goodIgnored in Taylor. Thornett expressly declined to deal w/ it.BealeSale of seen and unseen goods if non-correspondence “not apparent”, (p. 1196)HartmanneBay sale of watch “made for Patek Phillippe” [65] Exemplifies sale by description in the context of {s. 18(b) BCSGA}KendallBrazillian Groundnut ExtractionBuckley12 plastic clothes pins [20].The amount of correspondence depends on C/S’s wordingArcos: staves sold cif the River Thames did not correspond to description, (1/2 inch thick) b/c they swelled with water and C/S left no room for elasticity. The only exception is non-conformity below de minimis. It was irrelevant they were still fit for purpose per {s. 18(b) BCSGA}Examples of the Operation of this ConditionCaseBreach?DescriptionGoodsNBFreyYes —?descrip. was ‘misleading’ [23].1992 Dodge Dakota, 58,000 miles.All made from different cars e.g. body had 30,000 miles, engine’s mileage was unknown.Warranty breach b/c acceptance.JonesYes (a ‘peas & beans’ case)New enginePainted to look like new.No acceptance b/c no chance to test.VarleyYes“Nearly new” reaping machine.DefectiveNo action for price b/c no acceptance.BealeYes —?C falsely saw 1961 model.1961 Herald Convertible, disc on back.Front and back welded together. Front was earlier model. Back was 1961Warranty breach b/c acceptance.ArcosYes —?cif left no room for elasticity.Staves be ? inch thick “w/o qualification”Warped b/c swelled w/ water but still fit for purpose.Buyers could reject.MooreYes (p. 523)30 tins/case of canned fruit? total consignment was 24 tins/case.Hart-mannNoWatch made “for Patak Phillippe”Watch made “for Patak Phillippe”No rejection. Concerned s. 17(1) BCSGA.Normative Evaluation of s. 17(1)Difficult to contract out of, (cf. Act’s general thrust e.g. s. 69 BCSGA)Jones: Difference between new and second-hand engine is one of peas and beans, (Bowes). It is so fundamental (MacDougall) that it is of kind, (cf. quality) —?therefore, it is difficult to contract out of.s. 18(a): Condition that goods be ‘reasonably fit for purpose’s. 18 at a glanceComponentsOutcomeRule1. Buyer tells purpose to sellerCondition that goods be reasonably fit for purpose is engaged.2. Reliance on seller’s skill or judgment3. Goods are in course of seller’s business to supply.ProvisoGood sold under trade nameNo munication from buyer to seller: Can be express or impliedCaseImplicationBartlettThe Jaguar at least goes.BuckleyWhere buyer uses clothespins out of an ad as intended, (e.g. drying laundry)RelianceCaseReliance?Why?NBKendallYesExpress statements, (e.g. K’s recommendation of groundnuts to G) make proving reliance easier.Professional organization membership implying parties’ knowledge does not necessarily negative reliance, (cf. Lord Guest)HartmannNoC was knowledgeable, veteran (10+ years’ experience) watch-collector.s. 18(b) BCSGA case.MacDougall: Reliance suggests this provision is ‘tort-like’.Course of Seller’s Business: Not controversial; Courts take it for granted.CaseBusinessKendallG’s business to supply herring-meal to S.CrowtherD was car salesperson, therefore clearly in business of selling Jaguars.Outcome: Is the condition breached? What does ‘reasonableness’ mean?Kendall (Lord Morris): ‘Reasonableness’ is a question of fact and degree.CaseBreach?Why?KendallYesK’s liability to G, and G’s liability to S turned on the insufficiently precisely worded exemption clauses.CrowtherYesJaguar should have lased 20,000, (cf. 2,000,) miles, past owner knew how poor the engine was, and seller wouldn’t have sold car had they known the engine’s state, (cf. Bartlett’s ?45 repairs after 3 miles).WajakowskiYesLeaks, oil issues, and drive shaft concerns [11].Crowther: C could rely on provision 3-weeks post breach. The obligation seems somewhat ongoing, (cf. Mash, Buckley).The outcome in the context of allergies is very different:CaseC ‘normal’?Good ‘dangerous’?OutcomeEsborgYesN/AD gives warranty where good contains medical irritants, breached by showing (a) harm to, (b) appreciable class & (c) C innocently using product as intended.GriffithsNo —?C was ‘idiosyncratic’: “no normal [person] would have been affected”, (Griffiths)No (Tweed Jacket)C must disclose “essential characteristics” to D but failed to so could not sue for dermatitis.InghamYes (Hair dye)C must only disclose where they pass ‘test’, (e.g. spot test,) if they know they’re sensitive. C failed to disclose previous sensitivity.MacDougall: Law is harsher on allergen-producers to reflect their ‘culpability’.Brogan: Does not seem any more difficult. The difficulty from this section comes from the sheer number of components, (which also apply to allergy cases.) The obligation in fact seems more onerous: C comes under duty to disclose.Proviso: Its applicability is a question of fact and degree, (Baldry, Bankes LJ)Baldry dicta about proviso’s applicabilitySituationEngaged?Buyer asks for purpose x, seller gives buyer A NoBuyer asks for A, (Bugatti) for purpose x (cruising) and seller confirms fitness for x, (“we specialize in Bugattis and can supply info”).No (hence D breached UKSGA)Buyer asks for A and does not care about seller’s guidanceYesSargant LJ (Baldry): Proviso’s rationale is to protect seller from manufacturer’s puffs, (p. 269-70)MacDougall: Redundant —?if only applicable where buyer does not care about seller’s guidance, there is by definition no reliance. Hence, already covered by ‘componentss. 18(b): Condition that goods be of ‘merchantable’ qualityComponent 1: Sale by descriptionMacDougall: see s. 17(1) ponent 2: Seller ‘deals in goods of that description’Hartmann [46]: Goods must be “substantially or significantly” part of seller’s tradeHartmann: Neither D, (self-described watch collector having sold 50-90 wares on eBay) nor D’s mother, (no evidence provided,) ‘dealt’ in antique watches. Hence, a collector could not recover their purchase price of a watch ‘made for Patek Phillippe’.MacDougall: notwithstanding wording, the s. applies to first sales.Outcome: Goods must be ‘merchantable quality’.Two tests: either ‘Cammell Laird’ or’Bristol Tramways’.Cammell Laird: Goods must be of ‘no use’. In practice, create a notional list of purposes based on good’s description. If any one of those purposes are fulfilled, (even if the buyer’s specific purpose is not,) the goods are merchantable, (assessed objectively at date of trial —?Kendall)Approved, (but amended) by UKHL in Kendall and Brown.Doubted in Bartlett: there is “considerable territory” between ‘no use’ and ‘fit for use’.Brogan: No “considerable territory”: ‘no use’ is simply a way of expressing ‘fit for use’ in the negative.Application of the Cammell Laird testCaseGoodPotential PurposesPurpose in factOutcomeKendallBrazilian Groundnut ExtractionTurkey or cow feedCow feed (deadly to turkeys)No breachBrownRayonDressmaking or industrialIndustrial PurposeNo breachBristol Tramways: goods in “useable condition though not perfect”?Bartlett: Jaguar fit for purpose even though clutch issues more serious than parties thought: car was “far from perfect” and required work, “but so do many second-hand cars”.“Goods must remain merchantable for a reasonable time”, (Diplock J, Mash)Mash: Risk for sale of potatoes c&f Limassol passed on or as from shipment. On shipment they were merchantable. After shipment, ship deviated to Famagusta, (cf. proceeding to Liverpool,) where the potatoes rotted. Diplock J held there was a breach, (goods were not fit on “arrival & disposal on arrival,”) but UKCA overturned this later.Buckley: Polystyrene clothespin ordered from ad was not immediately tested. It shattered on its first use due to its inherent brittleness. This was a breach and seller was liable to buyer when buyer was blinded.MacDougall: relatively narrow provisions are counterbalanced by s. 18(c).Proviso: If buyer ‘examines’, no protection if examination ought to have revealed defect.Examination: An inspection is insufficient, (Thornett Bray J)Thornett: C’s action for the price succeeded against D. Although prima facie, glue was not fit for purpose, it was hastily examined by D, (looked at, cf. in, barrels). The proviso applied.Brogan: Proposes onerous duty on buyer, (cf. Act’s ‘buyer protection’ policy).s. 18(c): Condition that goods be ‘durable’Durability: Not defined, and analogy to Buckley and Mash are inappropriate given BC Legislature put in this s. as an addition to s. 18(b).Normal use and surrounding circumstances must be analyzed. This is an ongoing guarantee, (cf. ss. 18(a)-(b).)Due to uncertainty, parties may wish to contract out.s. 19(2): Conditions arising where goods are sold by sampleSale by Sample(s. 19(1)): There must be a term to that effectCudhay: D inspected ? of a 400-crate consignment of eggs sold fob New York. D refused to pay b/c the other ? did not correspond to description. C’s action for the price succeeded: D could not transform inaction into sale by sample b/c neither parties intended it.(a) Bulk must correspond to sampleSteels & Busks (Sellers J): Extent to which a sample ‘speaks’ to the bulk’s quality is a question of fact.(b) Buyer must have reasonable opportunity to inspectBoth sample and bulk are required, (but this is unlikely, so it’s a good way for a buyer to avoid a bad bargain.)(c) Bulk must be free from defects not apparent on a reasonable examinationReasonable Examination: “common-sense standards of everyday life”, not “extreme ingenuity” (Godley p. 15)Godley: Applying those common-sense standards, an inspection of a catapult was pulling elastic back. This was done by both importer and seller, so there was no breach when the catapult broke and blinded C.Steel & Busks: No breach because trade understanding required a visible inspection. This wouldn’t have revealed chemical contained in 21/64 bales, rendering them unusable.Normative evaluation of s. 19(2).Test is less arduous on buyers b/c need not prove seller was ‘in business’, (cf. e.g. s. 18(a).)MacDougall: Neither here nor there b/c rare that seller by sample isn’t ‘in business’.This s. limits impact of ss. 18(a) + (b)The buyer is duty-bound to examine; if this would have revealed the issue, no recourse can be had to s. 18(b).Contradicts Act’s wording which seems to seek to give the buyer something.s. 31: Seller must deliver goods to buyerDelivery (s. 1): “voluntary transfer of possession”When?:s. 32: Delivery and payment are concurrent obligationsMacDougall: If payment date is specified, delivery date follows a fortiori. If there is no specification, look at passage of property.Brogan: Unhelpful that ‘condition’ in this s. is used in a different sense than in s. 15(4).s. 14(2): Whether time of delivery is a condition, warranty, or innominate term depends on contractual interpretation. The courts seem to be more generous w/ consumer contexts.Term Classification CasesCaseContextFactsTermOutcomeBowesCommercial9/10s rice sold cif Madras ‘April Shipment’ (‘peas’) was shipped in Feb. (‘beans’)Cond.Delivery obligation breached even though shipment was early: parties had good reason to specify.OppenheinConsumerBuyer waved and then reimposed time stipulation for car delivery.Warr.Estoppel re-ignited. This must be reasonable, (look at what is to be done, C/S terms). On facts it was, so seller breached.Where?:s. 33(2): Seller’s place of business unless C/S specifies otherwise.Brogan: more sophisticated parties will want to modify this, (e.g. if seller paid by L/C, parties may want delivery to be w/ CB.)How Much:Short Deliveries: Buyer can reject (s. 34(1),) or accept and pay pro-rata (s. 34(2).)Long Deliveries: Buyer can: reject whole (s. 34(3)(b),) accept enough to satisfy C/S and reject rest (s. 34(3)(a),) or accept whole and pay contract rate for excess (s. 34(4).)Admixtures, (i.e. goods “mixed w/ goods of a different descript not in C/S” — s. 34(5)): Buyer can accept conforming part and reject rest (s. 34(5)(a),) or reject whole (s. 34(5)(b).)Moore: Tinned fruit buyers ex S.S. Toromeo were entitled to reject entire consignment, {s. 34(5)(b)} when ? the consignment was packaged in sets of 24 (cf. 30 per C/S description). Seller’s action for the price failed.Installments:s. 35(1): Buyer is not obliged to accept installment deliveries.MacDougall: Consistent w/ C/L presumption that everything happens at once.If buyer accepts a former, conforming installment, s. 15(4) generally bars them from rejecting latter instalment unless the two exceptions apply:C/S is severable, (easier if goods are not part of set and separate prices are paid for them; more difficult if same commodity is delivered multiple times for single price).S. 35(2): Where there is a (i) stated instalment, for a (ii) separate price, and there is (iii) defective delivery or acceptance, it is a question of fact whether the breach is (a) repudiatory, or (b) sounds in damages only, (e.g. Maple Flock.)MacDougall: (a) modifies C/L.Maple Flock: 16th instalment of ‘rag flock’ did not conform to description (conform w/ government regulations.) The buyer’s failure to pay was a repudiatory breach and the seller was entitled to damages because the breach was severable, (the ratio of breach to the rest of the C/S was 1% and the chance of repeat breach was negligible.)Buyer’s Personal RemediesThe Right to Terminate and RejectEvery breach of (i) condition or, (ii) innominate term treated as condition is a ‘repudiatory breach’.At common law, the courts, cf. the parties, characterize the term type, (cf. Bunge). This rule is codified in BCSGA, (s. 15(2).) Assessment is by the contract’s terms, (s. 15(3).)The aggrieved party can elect to ‘terminate’ the contract after a ‘repudiatory breach’. This ends both parties’ prospective obligations. The possibility for termination is codified (s. 15(4).)s. 15(2) BCSGA adds a remedy to this C/L rule: repudiatory breaches allow the buyer to reject. Where the buyer rejects, seller fails to ‘deliver’ and the buyer can also sue for ‘non-delivery’.Losing the right to Terminate and RejectThe C/L rule operates by way of election: the aggrieved party can elect to ‘waive’ the repudiatory breach, ‘affirm’ the contract, and sue for damages instead.s. 15(1) BCSGA codifies the same election: buyer can (a) waive the breach, or (b) treat it as a warranty breach instead.There are two other circumstances under which the buyer loses the right to reject and terminate; they are forced to treat the breach as a breach of warranty (s. 15(4) BCSGA):1. Where [any] property has passed in specific goodsThere are two components: (a) passage of property, and (b) specific goods.The strict wording implies the right can be lost before parties can discover breach. This is ‘worked around’ in Wakakowski.Wakaowski: A prima facie ‘specific’ car was not fit for purpose, (oil issues, leakage.) The buyer could reject given {s. 15(4) BCSGA} didn’t apply: only conditional property passed to the seller. The buyer’s acceptance was contingent on the seller completing certain repairs.2. Where any goods have been accepted under a non-severable C/SThere are three components (a) any good, (b) acceptance, and (c) non-severable C/SAny good: This means specific, ascertained, unascertained, future, etc.Acceptance: This is defined in s. 39 BCSGA and occurs where buyer: (a) ‘intimates’ acceptance MacDougall: codifies C/L election(b) is ‘delivered goods’ and ‘[acts inconsistently] w/ seller’s ownership’S. 38 BCSGA does not provide a limit to this rule, (cf. common sense meaning): Hardy (Bankes LJ p. 495).Hardy: D, buyer of Santa Fé wheat cif Uruguay, could not reject even though wheat did not conform to description and D noticed in reasonable time per {s. 38 BCSGA}. Goods were in transit at notice of rejection, but rejection requires goods be immediately available, (p. 496).MacDougall: Arguably, Hardy only applies to conditions which do not already entail reasonable inspection, (cf. e.g. sale by sample per s. 19(2)(b) BCSGA.)(c) buyer exceeds ‘reasonable time’ to reject.Rafuse: A reasonable time to reject a tractor was a few seasons because it needed to be tested in various conditions. Hence, D had successfully repudiated C/S, so C couldn’t sue on promissory note. MacDougall: an exceptional case —?usually, it’s a few days. Non-Severable: MacDougall: this is easier if separate prices have been paid and goods do not form a ‘set’. Conversely, this is more difficult where one price has been paid for ‘same’ good, (e.g. a commodity — the coal in Barker?).Exception: s. 34(5) BCSGAGenerally, part-acceptance is acceptance of whole (s. 15(4) BCSGA). S. 34(5) BCSGA is an exception: where admixtures have been delivered, seller can (a) accept conforming part and reject rest, (e.g. Barker) or (b) reject whole. Barker: Coal was admixed, (part above, part below deck) and buyer accepted deck-stored coal by selling it to TP, {s. 39(b) BCSGA}. The Court assumed deck-stored coal conformed to C/S. Prima facie, this is acceptance of the whole, {s. 15(4) BCSGA}. The hold-stored coal was not of merchantable quality. Buyer was entitled to reject under {s. 34(5)(a) BCSGA}. MacDougall: Only available where exact quantity has been delivered, or else ss. 34(1) 34(3) BCSGA would be unnecessary?DamagesThis is dependant on the relevant party’s solvency; if insolvent, use lien.Damages at C/LDamages are compensatory and seek to put aggrieved party in the position as if contract had been performed, so far as money could do it, (Robinson v Harman)Wertheim: C cannot be in a better position than they would have been but for the contract’s performance. The limit was approved in Bowlay [37], [45]. Limitation 1: Overcompensation: MacDougall: fact-dependant, (e.g. Cullinane cf. Sunnyside)Bowlay: C sued D for additional expenses incurred when D failed to supply C with requisite trucks. C could only claim nominal damages: C was engaged in a “losing operation” so to allow compensation of capital loss would offend i/a Wertheim [34].Cullinane: A defective clay pulveriser was supplied, (crushed 2, cf. 6, tons/hr). C claimed ‘profit’ (lost profits over ‘useful life’ of machine given its capacity should have been at 6 tons) and ‘capital’ (difference in value between 6-ton and 2-ton machine) loss. C could claim one but not both: that would be compensation “twice over” (p. 307). Sunnyside Greenhouses: Greenhouse roofing was not fit for purpose, (cf. ABSGA): they had either 3 or 5, (cf. 7) years of useful life. Capital loss, expenses, and lost profit (cf. Cullinane which “has not had a noteworthy career in Canada [24]) were compensable.Limitation 2: RemotenessThe ‘two limbs of Hadley’ are, in fact, one rule, viz. ‘what would a reasonable person have contemplated would flow from breach’ (Asquith LJ, Victoria Laundry); notwithstanding, it is useful to discuss them separately (Chen-Wishart)Limb 1: “reasonably foreseeable in the ordinary course of things; knowledge imputed to D”Victoria Laundry: ‘ordinary profit losses’ (ordinary business lost b/c delay in fixing boiler) were compensable but ‘exceptional possibilities of gain’ (lucrative government contract) were not.Parsons: D contemplated that badly-stored food would make pigs ill when D sold defective hopper to C. Pigs contracted an unforeseeable illness which killed them. D liable for pigs’ death: type, cf. extent, of damage must be foreseeable. Burrows: difficult to distinguish Victoria Laundry — Government contract = dead pigs.Limb 2: “substantial loss in both parties’ contemplation” at time of contract’s conclusion.Hadley: Carrier not liable b/c carrier didn’t know they carried mill’s only crankshaft.There is a debate into which ‘limb’ lost profits of follow-on contracts fall: Heron II suggests limb 1; Hall suggests limb 2:Heron II: Seller sold sugar to buyer cheaper due to charterer’s 10-day delay in breach of C/P. Charterer compensated seller’s market loss: they knew seller was in sugar business and there was market at port. Irrelevant that seller did not know of specific C/S.Hall: D sold C wheat ex. Indianic but could not deliver B/L b/c D already sold and delivered to TP. C breached follow-on C/S. D liable to C for lost profits and indemnities for breach of string-sale: although ‘exceptional’, D had ‘common-sense’ knowledge of the commonality of selling goods afloat. This was sufficient for ‘contemplation’ under Hadley limb 2. Limitation 3: MitigationBritish Westinghouse: A party not in breach has a duty to ‘mitigate’. If you do too good a job, you will not be able to claim, (Wertheim.)Limitation 4: Compensation for Mental DistressThis is generally not compensable (Wharton [57]) but exceptionally, it is:Wharton: C’s Cadillac breached s. 18(a) BCSGA. Comfort was an important part of the contract, (the “luxury car” was meant to be a “pleasure to operate” [59],) but instead caused “sensory discomfort” and “physical inconvenience”, [60]. ‘Mental distress’ damages were compensable.Damages under ss. 54, 56-57 BCSGAType BCSGAProvisionNotesNon-Delivery (Buyer sues Seller) 54(1)Non-Delivery damages are available to buyerUse this after buyer rightfully rejects.54(2)The prima facie measure is loss resulting ordinary + naturally from breach.Codifies Hadley limb 1.54(3)‘market loss’ damages measure is contract price less market price at supposed delivery time.Warranty Breach 56(1)Set-off (a) or damages (b) from warranty breach are available to buyer.56(2)The prima facie measure is loss resulting ordinary + naturally from breach.Codifies Hadley limb 1.56(3)‘market loss’ damages: difference between value of conforming and non-conforming goods at delivery time.MacDougall: wording about ‘quality’ is irrelevant. Ford: D must establish value or courts presume it to be nil [9]. On facts, no evidence adduced to ascribe value to truck unfit for gravel hauling. MacDougall: Therefore, maybe good to accept (cf reject)?Special Damages 57Buyer can recover for (i) special damages, or (ii) total failures of consideration.Codifies Hadley limb 2.Specific PerformanceThis remedy is available under s. 55(1) BCSGA for specific or ascertained goods. Re Wait: 500 tons of unascertained wheat were paid for but not received before the seller’s insolvency. Buyer could not benefit from specific performance of delivery of the B/L: s. 52 UKSGA only applies to “specific or unascertained goods,” but this did not occur on the facts: “legal property had not passed … there was no ascertainment” (p. 617.)Sky Petroleum: the rationale is that damages are adequate; one can buy replacement.The discretion given s. 55(2) seems to mirror general equitable rules, (e.g. damages must be inadequate —?Sky Petroleum)Sky Petroleum: Interim injunction requiring D to supply unascertained fuel to C was granted (p. 579) pending outcome of litigation in which C accused D of exceeding credit limit. Damages were inadequate because there was a petrol crisis, (p. 578).Brogan: injunctions should not amount to specific performance, (Nelson) but Goulding J admitted this is exactly what occurred (p. 578).Buyer’s Obligations under the C/SIntroductionBuyer comes under two obligations, (s. 31 BCSGA): (i) accept and (ii) pay.Obligation to Accepts. 39 BCSGA defines acceptance. This has already been discussed. It will not be noted further.Obligation to PayThe buyer must pay the right amount, (s. 12 BCSGA) at the right time in the right form, (e.g. letter of credit.)Kay: D sold meat to C but did not agree on payment time in C/S [10] and disagreed about when payment should happen: cash against documents, or by 90-day L/C [5]. D was required to pay cash against documents: this was ‘read in’ by operation of {s. 32 BCSGA}There is a lack of clarity about how to classify these three obligations, given BCSGA is reticent: time of payment is ‘not of essence’ (s. 14(1) BCSGA) and MacDougall suggests ‘form’ would be warranty, (cf. e.g. Trans Trust?)Seller’s Personal RemediesDebtAction for the Price (s. 52 BCSGA)Available on breach of buyer’s payment obligation if (a) property has passed; orStein, Forbes (Atkin J): C agreed to sell D unascertained sheepskin cif London or Liverpool. D refused to pay or take up documents. C’s action for the price was unsuccessful: property passes cash against documents, and there was neither. Colley: C agreed to sell D unascertained leather belts fob Liverpool. D refused to pay. C’s action for the price was unsuccessful. Property passes not before shipment, but there was no shipment: D failed to nominate ship so belts never crossed rail, (Pyrene).Peel: unjust (e.g. buyer profited from own refusal in Stein, Forbes), so maybe apply dicta from Res Cogitans: action should be available on passage of risk, or (Gullifer) delivery. This is particularly relevant given other reforms (e.g. pushing property in—Napier) requires parties’ cooperation which traditionally bars this action, ( e.g. White & Carter).(b) payment is to occur on a “day certain irrespective of delivery”.Liquidated DamagesThis is not technically a remedy because it is a primary obligation. It is available to the parties.Standard Radio: Radio service providers did not need to ‘mitigate’ by airing other ads. Mitigation is only required for a claim in damages, (cf. debt).The ability to claim is subject to the sum not being considered a penalty. MacDougall: the Canadian test is unclear. SCC has yet to depart from Dunlop’s ‘genuine pre-estimate of loss’, but would likely follow the UK’s ‘unconscionability’ test from ParkingEye/El Makdessi.DamagesBuyer can be liable to seller where they (i) delay, or (ii) refuse to take delivery of goods.Damages for Delay (s. 41(1) BCSGA)Buyer is liable for (a) loss caused, and (b) storage/care charges. A seller’s claim here does not affect their claim for non-acceptance, (s. 41(2).)Damages for Non-Acceptance (s. 53(1) BCSGA)Both limbs of Hadley are accounted for: s. 53(2) uses the wording of limb 1, and s. 57 allows for ‘special’ damages to be claimed. The quantum is ‘ordinary loss’ unless there is an ‘available market’, (s. 53(3).)Normative Debate: When do you use ss. 53(2) & (3)?General Principle: s. 53(3) should not be used to do injustice to the buyer, (Beyda). This translates into bizarre results:Beyda: D failed to accept new Mustang, so same Mustang was sold to TP. D’s liability was quantified per s. 53(2). To hold otherwise, (that no market loss occurred b/c C sold Mustang to TP for same price) would obfuscate the fact that C was cheated out of another sale of the same Mustang to TP.Charter: D refused to accept new “Hillman Minx”, so same car was sold to TP. C could have sold as many cars as they would have acquired. D’s refusal did not, therefore, cheat C out of a sale. D had suffered no loss and only got nominal damages.There is no available market for second-hand cars, (Wight, Denning MR) so {s. 53(2)} should be used:Wight: D refused to accept second-hand car in breach. C sold it to TP. D suffered no loss from C’s non-acceptance. Applying {s. 53(2)}, D would not have contemplated C would have sold one less car, (p. 462F).Buyer and Seller’s Proprietary RemediesThe LienIn BC, there are two crucial liens: (i) buyer’s, and (ii) seller’s lien.TypeArises…How?Possessory?Specific or GeneralBuyer’s AutomaticallyStatute, (ss. 74-76 BCSGA)NoGeneral, (i.e. bites on all seller’s prop. 75(2). Seller’sAutomaticallyCommon LawYes, (≠ apply to e.g. debt)Specific, (e.g. Snagproof,) cf. s. 45 BCSGA.The buyer’s lien gives a property interest, (therefore could e.g. be assigned, disposed of); the seller’s lien is personal and is a property tort defence through the authorization given in s. 43(1)(a) BCSGA.Buyer’s LienBCSGAProvisionNotes75(1)Under seller’s usual course of business and (a) buyer pays at least some price, for (b) future or unascertained goods, (c) in good faith for person, family, or household ponents of buyer’s lien.75(2)Lien operates on (a) all seller’s goods which (i) are in possession for sale, (ii) correspond to description, and (iii) have not been sold to another buyer; and (b) seller’s savings accountsProperty upon which lien operates.76(1)Buyer’s lien discharged where seller (a) passes prop. to buyer under C/S, or (b) refunds buyer’s purchase price.How to discharge a lien.76(2)Discharge does not affect buyer’s rights to sue for breach.76(3)No lien arises for goods sold bf by seller to TP.Redundant given s. 75(2)(a)(iii)?Seller’s Lien (s. 43(1)(a) BCSGA)Seller must be unpaid for this remedy to bite, (s. 42(2) BCSGA). Its exercise does not terminate the C/S, (s. 51(1) BCSGA.)Unpaid seller can retain possession of goods where (a) no credit given, (b) credit has expired, or (c) buyer is insolvent, (s. 44(1) BCSGA,) even if they are buyer’s agent/bailee, (s. 44(2) BCSGA.)A seller who has not been paid for part of the goods can exercise a lien over the remainder, (s. 45 BCSGA). This modifies the position at C/L, (e.g. Snagproof).Snagproof: C sold D overalls fob Beebe but failed to deliver a portion of the instalment. D refused to pay. C refused to deliver remainder. C was in breach and D could sue for damages: C was unable to turn their specific lien into a general lien [26].The lien is lost where (a) seller delivers, or (b) buyer obtains lawful possession of, goods, or (c) seller waives it, (s. 46(1).) It is not lost despite seller receiving judgment for price, (s. 46(2).)Seller’s Stoppage in transitu (s. 43(1)(b) BCSGA)Seller must be unpaid, (s. 42(2) BCSGA) by insolvent (defined in s. 3 BCSGA) buyer.Seller’s Right of Resale (s. 43(1)(c) BCSGA)This only applies where seller is unpaid, (s. 42(2) BCSGA)Property has passed to buyerM risks being sued by both (i) O for conversion or breach of delivery if O pays, and (ii) P for a 16(a) breach and for total failure of consideration. The success of these actions depends on the operation of ss. 51(2)-(4) BCSGA. The seller’s lien must have been exercised for s. 51 to apply, (s. 51(2) BCSGA).S. 51(2) removes the possibility of P suing M for total failure of consideration & O suing P in e.g. conversion (better protection for P and M b/c P need not be equity’s darling cf. s. 30(1).)S. 51(3) applies if (i) goods are perishable, or (ii) M gives O notice to pay and O fails. O cannot sue (i) in conversion because this section empowers M to sell to P, and (i) for a delivery breach because Ward reads in the termination of the C/S. P’s position is unclear —?perhaps Ward prevents a s. 16(a) action.Ward: C could sue D for non-acceptance, (cf. action for price b/c prop. must have passed) of car after it was sold at a loss. On resale, prop. momentarily reverts to M, to then pass on to P.S. 51(4) applies where C/S reserves resale right. The C/S is terminated and rescinded on resale: O cannot sue M for either cause of action, and P cannot sue for total failure of consideration.Property has not passed to buyerM risks being sued by both (i) O for breach of delivery obligation, and (ii) P for s. 16(a) breach. Presumably, the ss. apply similarly as above.Nemo Dat & ExceptionsNemo DatSeller cannot give what they do not have, (s. 26(1) BCSGA.) Where a seller purports to sell more than they have, the buyer can set up a s. 16 BSCGA breach against them unless excepted. ExceptionsTerminology is crucial. O has original good title to goods. M is middleperson w/ defective title, who disposes to P. O and M’s transaction is the ‘entrustment transaction’. M and P’s transaction is the ‘dispositive transaction. O MP.Estoppel (s. 26(1))O’s conduct precludes O from (i) denying M’s authority to dispose to P and (ii) setting up O’s ‘better title’ as against P. P takes whatever title O had. Statutory wording suggests it only applies to sales, (cf. agreements to sell.) Shaw: O’s signature on document noting O sold car to M established P’s prima facie estoppel. However, no property passed b/c there was no sale: “[M] never purported to give what he did not have,” (p. 1338A)Market Overt (s. 27(1))P’s purchase as equity’s darling from M in a ‘market overt’ grants P best title, (i.e. could be better than O’s title if O had defective title.)Market Overt: a licenced place of business open to the publicManning: a garage sale in which gold coins were sold was not licenced. P did not benefit from this exception. Coins had to be returned to O.S. 29: title revests in O if M stole goods from O, and M is prosecuted to completion, (cf. e.g. guilty plea,) for theft, (cf. e.g. fraud.)Voidable Title (s. 28)Where the entrustment transaction is voidable, P takes best title if M transfers goods to P before entrustment transaction is rescinded.O must communicate rescission of the entrustment transaction to M.Car: Alerting police and calling Insurance Agency was sufficient to rescind the entrustment transaction for mistake. M was a rogue who could not be contacted.Seller in Possession (s. 30(1))Where M sells to O but retains possession of goods, and later sells same goods to P, equity’s darling, P receives interest promised by M through operation of quasi-agency.M must be in continuous possession of the goods, (Pacific Motor Auction, approved in Cooden)Pacific Motor Auction: M was buyer in possession irrespective of the fact that O later revoked M’s authority to sell cars. M sold a car to P after that revocation, and P took good title due to M’s continuous possession. The requirement for continuous possession is required to do justice to the mischief of s. 8 UKFA 1889: offer more protection than the estoppel exception.Buyer in Possession (s. 30(3))If O gives M possession of goods before purchasing them from O, where M sells to P equity’s darling, P gets the interest promised through operation of deemed mercantile agency and is protected from O.Head: O sold car to M. M was buyer in possession. C was therefore M’s creditor (cf. theft victim,) so could not claim from ICBC.Mercantile Agency (s. 59) Where M is O’s mercantile agent acting in ordinary course of business, (hence, very narrow) and has possession of goods, P will receive interest promised after M’s disposal to P as against O, if P was equity’s darling.Horvat: O did not authorize M to accept offers for sale of her car. M accepted P’s offer. P took good title. M was O’s agent in possession of the car. O consented to their agency relationship. The situation covered O’s ‘ordinary course of business, assessed objectively [36]. Absence of transfer papers might help prove P’s notice but that was not the case on the facts [44]. ................
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