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Contract of Sale Essay

In a contract of sale of goods the goods sold must meet some conditions and warranties. The seller and the buyer have specific rights in case of one party refuses to honor part of the contractual terms. This case is a normal contractual sales contract and there are a number of remedies available to both parties in case one fails to honor part of the contract. This section of the paper seeks to highlight remedies available for both parties in case of refusal of the buyer to honor part of the contract.

  1. a) If Dan refuses to accept the ornaments in bad faith Barbara will win the case in court and the following remedies is available, action for damages and action for specific performance.
  2. i) Action for damages: This is a normal remedy for breach of contract. This remedy is available specifically when the seller has fulfilled all conditions to the seller and the implied conditions that must be fulfilled in order for Barbara to succeed must include if the sale was by description, they should correspond with description, if the sale was to quality and fitness they must fulfill that condition and if it was by sample it must be similar to the sample unless there was an express agreement to exclude the implied conditions and warranties. The aim of the law is to return Barbara as far as possible in the position he could have been in if the contract had been performed. The law considers that the loss sustained from breach of contract is too remote to merit any compensation then it will not be awarded.

In the following case of Hadley v Baxendale where H, a mill owner, delivered a broken crankshaft to the defendants, who were common carriers, and they promised delivery on the following day to the maker for using it as sample. The defendants took several days to make delivery with the result that the mill remained idle longer it would have been had delivery been made as promised. The plaintiff claimed damages for loss of profits arising from extra delay. The plaintiff did not make known to the defendant that the delay would result in a loss of profits.

It was held that the defendants were not liable to pay h damages for loss of profits. The loss did not arise naturally and defendants were not aware that H did not have a spare crankshaft. Judge B. Alderman said damages for breach of contract should be such as may fairly and reasonable be considered either arising naturally i.e. according to usual course of things, from such breach of contact itself or such as it may reasonably be supposed to have been in contemplation of both parties at the time they made the contract as the probable result of the breach of it.

The damages available for Barbara include ordinary or general damages nominal damages which are aimed at returning Barbara to the original position.

  1. ii) Action for specific performance:- This is available to her and is equitable remedy which will be awarded and the discretion of the court and it involves requiring done to carry out his contractual obligation. Specific performance in this case will be the best option.
  2. If Dan refuses to accept the goods in good faith, he has some remedies and it must be proved that refusal was in good faith. This may be possible if delivery was of wrong quantity not by description and many to the implied conditions and warranties. He will sue and succeed. To begin with he will sue for breach of condition where the contract will be treated as repudiated. The rights of the buyer include recovery of price if he had paid some price then he will entitled to recover his price plus the cost of the case.

He is also entitled for specific performance where Barbara will be required to deliver goods as per the specification. This is available because the goods are rare in the market.

  1. C. in the above circumstances I would advice Barbara on different issues. If Dan refuses to accept the goods in bad faith, I will advice Barbara to take legal action against Dan for specific performance of the contact. The legal action will enable him recover the damages they could have incurred.

If Dan refuses in good faith to accept the goods I would advice Barbara to deliver the goods to Dan as per the specification of the contract. I would advice her to avoid being sued by Dan by performing her part of the contract as per the agreement.

QUESTION 2

In this case Jack has entered a contract with Blue circle for all medical expenses which are medically necessary including reasonable necessary transportation. The prescription of the doctor in this case was that Jack was going to die if he was to use a car to the hospital. He prescribed the use of an helicopter to the hospital. The doctor further said that the treatment was not a guarantee but he will definitely die without it.

Blue circle paid for expenses reasonably necessary and medically necessary to the hospital. Jill and her estate have sued but they will not prevail because the doctor’s prescription was that the helicopter was to be used to take him to the hospital where he was going to get special treatment and in this case the special treatment failed. The failure of the medical services meant that regardless of the mode of transportation used to transport Jack back he was going to die. Therefore whether Jack was transports in a helicopter back home or a car he was going to die since a specific event occurred which made the dying of Jack probable that is the failure of treatment.

The conditions and warrants of the contract were not breached by Blues circle since they paid medically necessary and reasonably necessary expenses. What it means is that a condition subsequent occurred which made the contract of transporting Jack on a helicopter to cease. The subsequence condition was the failure of the medical as prescribed by the doctor.  The following cases contained similar facts.

BETTINI V GYE:- B, was engaged for the whole of the season to sing at G’s theater and agreed to appear six days in advance for the purpose of the rehearsals. But due to his illness B arrived three days in advance instead of six days as agreed. G, terminated his contract on his ground. Held that rehearsal clause was collateral to the main purpose of the contract, and its breach could give rise to damages and not to rescission of the contract.

PUSSARD V SPIERS:- P was engaged by S to play a leading party in a new opera for a short duration. Due to her illness, p was unable to take up her role in the first week. S was forced to engage someone else and refused P’s services. It was held that the promise to take part from the first night was vital to the existence of the contract, and its breach entitled S to repudiate the contract.

BEHN V BURNESS:- The defendant charted a ship to carry coal from Newport  to Hong Kong. The plaintiff described the ship as “now in the Port of Amsterdam” whereas in fact the ship was 62 miles away from Amsterdam. The ship was late in arriving at Newport, and the defendant refused to load it. held that the defendant was entitled to do so because the situation of the ship, when the contract was made, was a term of great importance and must be treated as a condition.

Going as per the facts of the above cases Blue circle will prevail because of the mentioned cases and material facts of the case itself. What it means Blue circle discharged the contract through performance. They fulfilled part of their bargain and in my opinion taking back Jack in a helicopter was inconsequential since the medical failed. Therefore the discharge of the contract was accordance with the contractual agreement of medically and reasonably necessary expenses. Taking back Jack does not amount to a medical or necessary expense because he will definitely die. This cannot be described as partial performance of the contract since they delivered the patient to the hospital and failure of the medical means the contract is completed.

Breach of contract arises when one fails to perform part of his contract when performance is due. Performance was due when it was discovered that Jack was required to be taken to the hospital and Blue circle did the same discharging the contract therefore no breach of contract.

In  a case of Taylor v Caldwell, the judge stated that in a contract in which the performance depends upon the continued existence of a given person or thing, a condition is implied that the impossibility of performance arising from the perishing of the person or thing shall excuse the performance.

The above decision modified the old rule in Paradine v Jane 1648 that contracts always impose absolute obligations. The destruction of the subject matter need not be whole; it is sufficient as long as it prevents the contract from being carried out.

Question 3

The silo act as a bailee where cereals are deposited, the bailee is not entitled to use the goods and must exercise reasonable care of them while they are in their custody. If the bailees delivers or sells goods on a wrong price or to the wrong person is not protected in any circumstances. The bailee have the following duties.

 To take care of the goods bailed. Whether a bailee is to paid or not, he is required to take the same standard of care of the property entrusted to him. In all cases of bailment, the bailee is bound to take as much care of the goods bailed to him as a man of ordinary prudence would sunder similar circumstances take care or his own  goods of the same type. Where the goods are stolen from his possession, it is his duty to report the matter to the police.

 He must not be negligent. But if the loss of the goods is use to an act of God or violent robbery, a bailee is not liable.

Unauthorized use of goods:- The bailee in any type of bailment is under duty not to use the goods in a manner inconsistent with the terms of bailment. If he does, he becomes liable for such loss unless such as necessary for the preservation of the goods.

To return the goods; it is the dusty of the bailee to return the goods without demand on the expiry of the time fixed or when the purpose is accomplished.

In the following situations, the bailee was held liable to pay damages:

  1. Where goods were stolen by the servant of the bailee.
  2. Where a patient handed over her jewellery for safe custody and it was lost by hospital authorities who were held liable.
  3. A) John delivers his wheat to the silo in August paying $100 per month for storage and sale. The silo acts as agents of john and the agreement between him and John was entered in August although without specific time for selling. Any person who takes position of goods of another contract to hold them as a bailee and if he agrees to sell them then he takes up the role of an agent. The silo became an agent and a bailee at the same time of John. The stated purpose of delivery of the wheat to the government store was to sell the goods for the purpose to be completed. The bailee only obtained the possession of the wheat but not ownership. Therefore upon selling the goods, John in this case will make the following amount of money from the transaction

  1. B) Farmer Eric delivered his produce in September. The delivery was under similar conditions as john. They were sold part of it in October and the rest in November , he will get the following amount.

The sales of November will be deemed to be his because he entered the contract after john. The two farmers entered separate contract with the bailee. Therefore the last sale was due to change in price and there was no specific agreement between two people as to when the goods were to be sold and at what price.

  1. C) The relationship between the parties and the silo was that of a baillee and an agent. The silo became an agent and that’s why he was receiving brokerage fee of 10%. The agency was by express agreement and the agent has a number of duties and rights. The rights of an agent include; Indemnity: the agent has a right to indemnity against his principal. The principal is under a duty to indemnify his agent against all charges, expenses and liabilities properly incurred by him in the lawful execution of his duties. The agent has a right, if sued, to set off the value of his indemnity against the amount due from him to his principal.

Remuneration: unless the services are rendered by the agent voluntarily and gratuitously, he is entitled to receive any agreed remuneration, and if none was agreed, a reasonable remuneration. The agreement to pat remuneration may be implied by conduct or trade usage.

The agent loses the right of claiming any remuneration if he has misconduct himself in the performance of his duties such as by accepting a secret commission.

Lien: certain classes of agents such as factors, bankers, stockbrokers and advocates can hold their principal’s goods in respect of their remuneration and other lawful expenses incurred in the course of execution of their duties.

The silo will get the following as their income from all the transactions.

Storage fee for John  100 x 2                                                200

Storage fee for Eric                                                               200

Brokerage fee for John                                                         600

Brokerage fee for Eric                                                          390

                                                                                              1,390

The silo will be able to receive this amount of 1,390 if they discharge their duties reasonably and these duties as an agent and a bailee include carrying out instructions according to terms and conditions agreed., keeping John and Eric informed all matters relevant to their produce and working under reasonable care, skill and diligence in selling this produce. He must keep proper accounts of the sales.

D)There are a number of contractual relationships in this scenario between the silo and the farmers as well as between Michael and the silo. The contract between John and the silo were to take reasonable care of the goods and sell them at a reasonable price. The contract is express and implied. It is express in terms of the storage of the goods. It is implies that end sales of the produce must be delivered in good conditions.

Mike and the silo have entered into a contract of sale which can be irreversible if the silo did not disclose that they were selling the goods as agents of John and Eric. If they disclosed about the existence of Eric and John then the contract of sale will be between John, Eric and mike without involving the silo who will be the agent.

In either case, whether the silo disclosed whether they are agents or not, there is a contract between Michael and the silo of a common carrier. They become common carriers because they agreed to deliver the goods to Graham Cracker Bakery and they will be liable in case they do not deliver the goods to the right person and the right time. Therefore Michael is entitled to pay the freight charges.

  1. E) The seller is supposed to pay for the freight and insurance charges. This means that the buyer is supposed to incur all the expenses associated with freight.

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REFERENCES

Jordans Cases and materials in Company law, L C Sealy, Butterworths Heinemann

Lowry, J., Dignam, A. and Padfield, (2004) Company Law, Butterworths
Slorach, J.S. and Ellis, J. (2006) Business Law LPC Guide Oxford OUP

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