Summary Guide For Chapter 11 Foundations of Australian Law: Fourth Edition
Summary Guide For Chapter 11 Foundations of Australian Law: Fourth Edition
Summary Guide For Chapter 11 Foundations of Australian Law: Fourth Edition
Foundations of
Australian Law
Fourth Edition
Callie Harvey
VIC
QLD
SA
WA
TAS
ACT
NT
Refer to the text book for particular sections of the Act to answer problems
in particular states and territories.
It is important when answering a question relating to the sale of goods
that you identify the types of goods that are the subject matter of the sale
contracts.
existing goods - owned and possessed by the seller at the time that the
contract was made;
specific goods - goods agreed upon and identified at the time that the
contract of sale is made;
An executed contract:
-
gives the seller the right to sue the buyer for the price of the
goods;
gives the buyer the right to claim damages against the seller if he
or she does not transfer the goods, and for interference with the
goods in other words, if the seller wrongly disposes the goods;
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imposes that after the sale, the buyer bears the risk of loss to the
goods.
Executory contract:
-
does not involve the transfer of the goods at the time the contract
is made but at some future time, or the transfer is dependent
upon a condition(s) in the contract;
imposes that the risk in the goods remains with the seller because
ownership of the goods has not been transferred to the buyer;
where the buyer defaults, the seller can sue the buyer and vice
versa;
where buyer defaults the seller and the buyer can sue for
damages.
If the problem asks you to explain when ownership has passed from the
seller to the buyer you will need to apply a number of rules:
When a good is bought, ownership passes from the seller to the buyer and
if the goods are damaged before they have passed to the buyer, the loss
suffered is endured by the seller. The general rule is that the seller endures
damage or loss suffered to the goods before they are passed to the buyer
unless an agreement to the contrary has been made. The Sale of Goods
Acts have also provided the following rules as a guide for judges:
the buyer retains the goods beyond the agreed approval time or
beyond a period of time that is considered to be reasonable or
Rule 5(2) Delivery to the buyer or carrier without a right of disposal where the seller delivers ascertained goods to the buyer or an authorised
representative of the buyer, ownership passes at the time the delivery
takes place: Wardars Import and Export) Co. Ltd v Norwood & Sons Ltd [1968]
2 QB 663
If the problem asks you to explain the right of disposal of goods you may
need to examine:
Romalpa clause used where the sellers of goods included this clause in
the contract to indicate that the legal ownership of the goods remain
with the seller until such time as the buyer has made a full payment
for the goods.
The Sale of Goods Acts, imply that the seller is said to have reserved the
right of disposal where the goods are shipped by sea through the bill of
lading or where payment has been made through a negotiable
instrument.
Where a problem raises the issue of risk of passing goods- the general rule
is where the goods are lost, damaged, deteriorated or destroyed the risk
passes with the property.
Where a problem raises the issue as to whether goo title can be passed by
a person who did not own the goods in the first place then the nemo dat
rules should be applied.
Nemo dat rules - A buyer receives the same rights to the goods as the ones
possessed by the seller. This is called the nemo dat rule the transferee
(buyer) cannot receive a better title than the transferor (seller) had.
However, it is important to note that there are some exceptions to the
nemo dat rule:
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Sale under a voidable title under common and statute law a seller who
possesses goods under a voidable title at the time of sale, he or she
may pass on good title to the buyer if the goods had been bought in
good faith and were not notified of the original sellers defect in the
title. Seller is in possession of goods but sells them to a third party:
Pacific Motor Auctions Pty Ltd v Motor Credits (Hire Finance) Ltd[1965]
112 CLR 192.
If the problem addressed issues with the terms of the contract of sale it is
important to consider possible implied terms
the goods must not have any defect that would not be found
upon examination of the goods.
Implied condition as to fitness for purpose - the buyer must inform the
seller expressly or impliedly of the particular purpose for which the
goods are to be used and relies on the advice given by the seller then,
the goods must be reasonably fit for the purpose for which they are
bought: Grant v Australian Knitting Mills.
Section 71(2) of the Trade Practices Act 1974 and state legislation places
obligations upon a seller or manufacturer who supplies the buyer
during the course of business that the goods are reasonably fit for any
purpose that the goods are to be used even where the goods are not to
be used for their common purpose.
the goods must not have any defect that is not possible to
detect upon examination of the sample.
Where the problem deals with the types of rights that an unpaid seller
where the goods have not passed to the buyer, consider the following:
Right to lien;
Where the problem deals with the types of rights that an unpaid seller
where the goods have passed to the buyer, consider the following:
The seller has a right to bring an action against the buyer for the price
of the goods.
If the unpaid seller chooses to sue for the price of the goods he or she
cannot claim loss of profit.
If the seller has already resold the goods they can claim damages for
the difference between the contract price and the actual price the
goods were sold.
The seller cannot sue the buyer for the full price of the goods because
he or she can no longer deliver the goods to the buyer as they are
already re-sold.
Where the problem deals with the types of rights that buyer has consider
the following:
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Recision.