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Dennant v Skinner (1948) Rule 1: clearly an unconditional contract of sale.

Property passes
with the intention of the parties at the time of making the contract. Any right of reservation
afterwards is not valid.

Ward v Bignall (1967) Rule 1: specific goods+ (Diplock) - very little needed to give rise to the
influence that the parties intended property only to pass on payment or delivery
Underwood v Burgh Castle (1922) Rule 2: Must be in a deliverable state (s promised to load
machine on the train). Fact that goods were poor quality does not determine that it is not in a
deliverable state.

Jerome v Clements Motor Sales (1958) Rule 2: actual notice required, constructive
notice not enough.

Anderson v Havana horse (1999) Rule 2: test is objective, nature of goods and matter of
fact and degree. Cracked windscreen and scratches. Scratches held to be collateral.

Nanka-bruce v commonwealth (1926) Rule 3: here not rule 3 but where S has to weigh,
measure or test for the purpose of ascertaining the price then the property does not pass until
the act or thing is done and the buyer has notice it has been done

Kirkland v Attenborough (1897) Rule 4: B pledges the goods with a pawnbroker) the
instance where he pledged the goods to the pawnbroker then the property passed.

Elphick v Barnes (1880) Rule 4: horse delivered on a trial and died before the return
deadline (no fault). So no sale at time of death. B must show the adoption of the transaction
by word or conduct. B not liable for the price.

Weiner v Gill (1906) Rule 4: Jewellery sold on approval was delivered to a third party by the
purchaser. Property had not passed because the terms of the contract indicated a clear
intention that the property was not to pass until the payment to the original seller was made.
If property seized by a third party then goods not obtained under rule no. 4.

Re Ferrier (1944) Rule 4: Buyer will not be deemed to have adopted the transaction if he
is prevented by forces outside his control. If goods are lost or destroyed, before fixed for their
return, then property does not pass to the buyer.

Poole v Smiths Car Sales (1962) Rule 4: Car not sold and returned after date requested
and had been badly damaged. Here no rejection of the goods & it had passed to the defendants
after a reasonable time had elapsed, so it was held the goods had passed.

Atari v electronic boutique stores (1998) Rule 4: notice rejecting the goods before the
expiry of the return deadline was effective. The fact that B did not have the goods immediately
available for collecting by S did not invalidate the notice of rejection-so long as you provide
notice within specified period, you can delay delivery/collection

Carlos Federspiel v Charles Twigg (1957) Rule 5(1) : goods unascertained. FOB k- property
& risk don't pass until goods are on board the ship. S became insolvent but bikes already in
crates and labeled. Normally this would be enough to appropriate the contract but the
property didn't pass.- parties must have had or be reasonably supposed to have had an
intention to attach the contract irrevocably to those goods. If final act to be done then prima
facie evidence that property doesn't pass until then...

Rohde v Thwaites (1827) Rule 5(1): B agreed to purchase 20 casks of sugar out of a bulk.
S filled 20 and delivered 4 of them. B accepted delivery but later refused to collect the
remaining sugar. Filling up the casks & B coming to pick them up is assent. Property had passed
and S could sue for the price of the sugar.

Aldridge v Johnson (1857) Rule 5(1): B sent sacks to be filled with Barley. S filled some sacks
but later they were emptied out again because S became bankrupt. B entitled to the Barley
because act of filling constituted an act of appropriation. So even though not sent to the rail
station -then property had passed (not a fob contract)

Langton v Higgins (1859) Rule 5(1): b sent bottles to be filled with peppermint oil. S sold
oil to third party and disappeared. Property in the oil had passed to B when bottles were filled.
Implied assent was given in advance

Hendy Lennox v Graham Puttick (1984) Rule 5(1): S assembled generators for delivery.
Had given B invoices and delivery note with serial no. on them. Serial no. meant that you can
pick up the goods, property passed when B received the delivery notes. Need to show that B
agreed to a sufficient act.

Customs v Everyone (2003) Rule 5(1)- alcohol delivered to warehouse and received a
retention number. Property passed. But where release notes did not cover all the claimants
stock under the specified rotation numbers, goods were unascertained and goods could not
pass.

Kulkarni v Manor Credit (2010) CA held that for the presumption as to intention in Rule
5 to apply, the Mercedes had to be in a deliverable state which it was not until it had its
registration plates affixed to it. No evidence that they had affixed at any time prior to the date
of delivery. Mercedes was not in a deliverable state on K made even if at that date it was
ascertained.
-unconditional appropriation- CA held that in the case of a sale of a car to a consumer, property
is not intended to pass until delivery at which time inspection can take place and the cars log
book or registration documents are handed over. Would have to be good evidence that the
parties intended property to pass prior to delivery→ clear evidence would be required to show
an intention to pass title in a vehicle to an individual prior to delivery & transfer of registration
documents.

Pignatoro v Gilroy [1919] Contract for the sale of rice and the seller notified the buyer later
that the bags were ready for collection. The buyer did not collect some of the bags for almost
one month and the rice had been stolen. B did not object to collect since there were no other
notes.
Appropriation through tender of delivery order by the buyer
Wardars (Import and Export) v Norwood [1968] 2 QB 663 Contract for the sale of frozen ox
kidneys, which were picked up by a driver (who had a refrigerator but forgot to turn it on) on
behalf of the buyer. The kidneys were spoiled. The property and risks passed to the buyer at
the pickup time because appropriation had happened when B send over delivery note (with
driver). Deterioration was afterwards.

Healey v Howlett [1917] Unascertained goods of larger bulk. 20 boxes of fish of 190 boxes.
20 of them to S, rest to B. Boxes were not earmarked for delivery therefore no identified goods
had been appropriated to the K. Fish deteriorated. Should have been earmarked with the
names of the companies. Risk stayed with the seller.

The Elafi [1982] Bulk was reduced so taken as appropriated. Property had passed & so
had risk. Therefore sunken ship meant responsibility was with the buyer. (Previous law: Re Wait
[1927]) Bulk of 1000 tons of wheat, B agreed to buy 500 tons. Goods ascertained. B paid for
goods whilst in transit, S became insolvent by the time cargo had arrived. B's claim failed
because there was no act of appropriation. Property did not pass to B. Would be different
today because of s.20 (Tenancy in common)

Demby Hamilton & Co Ltd v Barden [1949] 1 All ER 435 S agreed to sell B 30 tons of apple
juice, S crushed the apples & put juice in sacks to await collection. It was not yet appropriated
to the K as it was required for b to give directions as to delivery to B's customers. B delayed.
Juice went off when it was collected as B was delayed in collecting. Property had not passed
yet to B but B should bear the risk of deterioration which had resulted from his delay.

Sterns v Vickers [1923] S owned 200 gallons of white spirit stored in tanks by a third
party. S sold 120 to B and gave B free storage for a certain amount of time & it was agreed that
B would make their own storage arrangements after a certain day. However B did not come &
pick it up for several months & the spirit had deteriorated. Property did not pass- goods
remained unascertained. Parties intended risk to pass with the delivery note. Property didn't
pass but risk did. → case was exceptional
1) Agreement inferred by the court
2) Agreement resulted in risk passing BEFORE the property
3) Resulted in risk passing in unascertained goods
Difference btw Generic unascertained & Unascertained goods from a specific source
Generic goods: Goods of this kind which are sold purely by description, such as 100 tonnes of
King Edward potatoes, are subject to a firm rule that is no exceptions, the seller undertakes
the entire responsibility of ensuring the potatoes are available for delivery and he accepts all
risks incidental to seeing that they are supplied. Leading case: Blackburn Bobbin v Allen

Regarding unascertained goods from a specific source, if the source ceases to exist at the time
of the contract, the contract is void as it is impossible to perform the contract, for example,
100 tonnes of King Edward potatoes out of the 200 tonnes now in the seller's store; the
contract will be frustrated if the entire 200 tonnes are destroyed, that is, both the seller and
buyer are excused.
It is essential to distinguish between purely generic unascertained goods eg 500 tons of wheat,
from unascertained goods from a specific source, e.g. 500 tons from a specific ship. If the
purely generic goods perish it is still possible to perform the contract, so the seller must obtain
goods from another source. If he doesn’t he must pay damages for non-delivery.
Put another way, in a contract for the sale of unascertained goods, the seller will not be
excused from performance, unless the contract requires the goods to be drawn from a
specified source, at which point the courts may imply a term removing or modifying the
obligation to perform in the event that this source is not available.

Re Wait
No property can pass in unascertained goods.
Goods are ascertained when they are 'identified in accordance with the agreement after the
contract is made'
(500 tons of wheat were sold from a cargo of 1000 tons that was on board a ship, Challenger.
When the seller went into liquidation, the court held that the sale was of unascertained goods
-- had not been separated from the 1,000 tons bulk and identified as the goods to be used in
the performance of the contract -- and so under s.16 property had not passed to the buyer at
the time of the contract. The buyer could not, therefore, claim the goods. He merely joined
the other general creditors.)

S.16 SGA 1979


Where there is a contract for the sale of unascertained goods no property in the goods is
transferred to the buyer unless and until the goods are ascertained.'
The identification of goods to the contract involves two stages separated by a temporal
interval:
1. At the moment the contract is made, the parties must, as terms of the contract, agree
upon the characteristics by which the goods to be supplied are to be identified,
meaning at least some verbal description in writing or by word of mouth.
2. At the second stage, goods possessing the specific characteristics must be set aside and
appropriated to the contract, so that the seller ceases to be entitled to buyer to take
other goods, even if having all the designated characteristics.
Limitations on the SGA
A contract will not be one for the sale of goods under s.2(1) SGA unless there is a transfer or
agreement to transfer property in the goods to the buyer.

The consideration is satisfied by money.


• Other contracts like hire purchase, or contracts to provide service, do not fall under the Act.

Possessory Title
A person who finds goods has what is known as a possessory title to them but this is strictly
subject to the title of the owner who can reclaim them.

A finder who fails to disclose to the buyer that he only has such title to the goods will be in
breach of s.12.

Goldcorp Exchange Ltd


Buyer cannot acquire title until it is known to what goods the title relates.

(Seller misled over 1,000 New Zealand investors in gold and other precious metals into
believing that he would store their bullion free of charge in a vault. The buyers received a
certificate of ownership which indicated the quantity of bullion purchased and entitled them
to take delivery of that quantity. Pending delivery, however, the bullion was kept as part of the
company's general stock and was not apportioned to individual purchasers. When the
company became insolvent, there was insufficient bullion to meet the claims of purchasers,
and the available bullion was claimed in its entirety by a bank that had a floating charge over
the company's assets. The buyers' claim for a share in the bullion failed. Held, their contracts
were for the sale of unascertained goods and, as a consequence, that they had no proprietary
rights to the bullion.)
S.17(1) SGA 1979
Where the goods are specific or ascertained, property will pass when the parties 'intend it to
be transferred'. To determine their intention 'regard shall be had to the terms of the contract,
the conduct of the parties and the circumstances of the case' (s.17(2)

S.17 provides that the parties may indicate their intention expressly or impliedly. Section 18
then sets out a series of rules of presumed intention which determine when property is to pass
when there is no express or implied indication in the contract.

However, both s.17 and 18 are subject to the overriding rule in s.16 which provides that where
there is a contract for the sale of unascertained goods no property in the goods is transferred
to the buyer unless and until the goods are ascertained. This rule is subject to one important
exception, in SGA, s.20A, when the contract is for the sale of unascertained goods from a
designated bulk source.

Creating a Trust in the goods


The courts reject the idea that under a sale contract the buyer may acquire an equitable
interest in the goods. A seller or a purchaser may, of course, create any equity he pleases as
one of the terms expressed in the contract of sale.
The parties may, for example, agree in the sale contract that the goods are to be held by the
seller on trust for the buyer. The parties must intend to create a trust and to limit the freedom
of the seller to deal with the goods, and the goods must be clearly identified.

Ward v Bignall
Property in specific goods is to pass only on delivery or payment
(seller contracted to sell 2 cars, Vanguard and a Ford Zodiac, to buyer who paid $25 of the $850
owed but then later refused to take delivery or pay balance. S gave notice that if he did not pay
within 5 days he would re-sell. Managed to re-sell one car. Held, by reselling the car Seller had
rescinded the whole contract, so that his only claim was for damages for non-acceptance. He
was not entitled to sue for price on the other - resale had rescinded the contract.)

S.18 - Rule 1 - goods in a deliverable state


Where there is an unconditional contract for the sale of specific goods in a deliverable state --
that is, no conditions to the contrary -- the property in the goods passes to the buyer when the
contract is made, and it is immaterial whether the time of payment or the time of delivery, or
both, be postponed.
Rule 1 only applies if at the time of contract the goods are in a deliverable state, and unless
this prima facie rule is excluded from applying because of a different intention appearing or
because there was some condition in the contract which prevented the rule from applying.
(B agrees to buy S's car. Since the car is specific, property passes to B when the contract is
made, even though B does not pay (deferred) and S retains possession of the car while B
obtains the price and arranges insurance. Conversely if the parties in the above example agree
that before B takes delivery S should replace one of the tyres, the car is not in a deliverable
state and rule 1 will not apply to the contract; property will pass in accordance with r.2 in s.18)

Underwood Ltd v Burgh Castle Brick and Cement Syndicate


Goods are in a deliverable state so long as nothing remains to be done to them by the seller
before the buyer can be required to take delivery.

S.18 - Rule 2 - Not in a Deliverable State


Where goods are not in a deliverable state at the time of the contract the property does not
pass under rule 1. However, if they are later put into a deliverable state where the seller has
undertaken the work necessary to render the goods deliverable, the property will pass when
the buyer has been given such notice as the contract specifies or, such notice as a reasonable
person would require.

Where the contract requires the buyer to put the goods into a deliverable state and the
property may pass, unless there is a contrary intention in the agreement.

Philip Head & Sons Ltd v Showfronts


Where the goods are not in a deliverable state, the property will not have passed to the buyer,
nor the risk.

Sellers sold carpet to the buyers which they were required to lay. The carpet was delivered to
the buyer's premises and some of the rooms were then carpeted. But in order to cover a large
showroom various lengths of the carpet had to be stitched together. The plaintiffs agent sent
them off to the stitichers on the afternoon of that day. when they returned some of the carpet
was stolen before it could be laid. Sellers claimed buyers owed them money for the carpet they
laid and that the risk had passed. Held: the carpet was not in a deliverable state though they
were at buyer's premises because they needed to be laid - s.18, r.5(1). The carpet had not been
unconditionally appropriated to the contract 'in a deliverable state. And the property in the
carpet had not passed to the defendants.
S.18 - Rule 3 - Price to be ascertained
Rule 3 applies if the "seller" of specific goods in a deliverable state is "required" to carry out
some procedure to ascertain the price, such as weighing or measuring. Property will not pass
until that has been done and the buyer notified. (Nanka-Bruce v Commonwealth Trust).
• Rule 3 does not apply where it was agreed that the act should be done by the buyer, and
therefore property may pass at the time of contract. -- Turley v Bates
And again, the acts to be performed by the seller must also be for the purpose of ascertaining
the price.
Nanka-Bruce v Commonwealth Trust
Where the price is fixed, but the buyer later weighs property and learns the amount contracted
to is less, the property will be considered passed where the goods were specific and in a
deliverable state and the weighing was merely to check that the right amount had been
delivered or a means to satisfy the purchaser that he had what he had bargained for
*Note, property will not have passed if the weighing was a means of determining the price. In
other words, property will not have passed to the buyer where the weighing or the like was a
condition precedent to a sale.

(A sold cocoa to B at an agreed price per 60lb, it being arranged that B would resell the goods
and that the cocoa would then be weighed by the purchaser in order to ascertain the total
amount due from B to A. B then sold all the cocoa at a set price to C, no weighing necessary,
and C paid B for the stock. A later took action against C claiming that the weighing up of the
goods must be treated as having a condition precedent to an operative sale. Held: the price
was fixed and the testing was merely to see whether the goods fitted the weights represented.
It was not a condition.)

Turley v Bates
Where it is agreed that weighing, etc., has to be done by the buyer for his own satisfaction,
S.18 - r.3 does not apply, and property passes at the time of contract.
(Seller contracted to sell to Bates a heap of clay lying on Seller's land. The priced was agreed
and it was to be carted away and weighed by Bates. Bates took and paid for part of it, but left
the remainder - about 1,000 tons. Seller sued for damages, claiming that the property in the
whole heap had passed to Bates at the time of the contract. Bates relied on the rule that
property does not pass where goods need to be weighed or measured to ascertain the price.
Held: the rule only applied where the seller was bound to weigh or measure the goods. In the
absence of the rule the court will look to the intention of the parties. On the evidence, it was
clear that it was intended by the parties that property in the whole heap should pass at the
time of the contract.)

S.18 - Rule 4 - Sale or return


When goods are delivered to the buyer on approval or on sale or return or other similar terms
the property in the goods passes to the buyer -
a. when he signifies his approval or acceptance to the seller or does any other act
adopting the transaction;
b. if he does not signify his approval or acceptance to the seller but retains the goods
without giving notice of rejection, then, if a time has been fixed for the return of the
goods, on the expiration of that time, and, if no time has been fixed, on the expiration
of a reasonable time.'
*In sale or return there is no contract or agreement to sell; there is only an offer by the 'seller',
which the 'buyer' may accept or reject.

The sale or return contract is not in itself a sale. this is an options to whether you will purchase
or not. You have agreed possession of the property for the agreed period. Terms are set out in
the agreement, however.

Atari Corp (UK) v Electronics Boutique Stores


Obligations of the 'buyer' and the 'seller' up to the point at which the sale is concluded?
The 'buyer' holds the goods under a contract of bailment. This means that the risk of damage
to the goods remains with the 'seller', although the 'buyer' must take reasonable care of them.
The 'seller' may not withdraw the offer to sell, except as the contract permits.
(EBS bought computer games from A under a contract providing "for sale or return until
1/31/1996". On 1/19/1996, it wrote to A advising that it would cease stocking some of the
goods and that it would return the unsold stock to its central warehouse so a detailed list of
returns could be prepared. A disputed the right of EBS to return the goods. Held: where the
goods were delivered on a sale or return basis, the buyer holds them as a contractual bailee
and any notice of rejection given before the time fixed for return is sufficient. The critical
consideration is whether there had been clear notice of rejection before the date fixed for
return - and there had been. Therefore A had to accept the return.)
What constitutes a notice of rejection?
Subject to any agreement to the contrary, rejection can be notified in any form and does not
require return of the goods, although the 'buyer' must make them available to the 'seller'
within a reasonable period of time after rejection.
Poole v Smith's Car Sales - Adopting the transaction?
If an act indicates personal use by the 'buyer', which goes beyond what is contemplated by the
arrangement, this might amount to 'an act adopting the transaction' - Poole v Smith's Car Sales
(Balham) [1962]
(plaintiff, having no room for a car which he wished to sell, arranged in August, for the
defendants to keep the car at their premises on a 'sale or return' basis, to sell the car if they
could, provided the plaintiff received a minimum sum of £325 for it. In October and November,
the plaintiff repeatedly asked the defendants to return the car, and at the end of November it
was returned in a badly damaged condition, and the plaintiff refused to accept it. Held: the
contract was one of delivery 'on sale or return' within the meaning of s.18, r.4 and, accordingly,
since there was no rejection of the property it passed to the defendants after a reasonable
time; and that in all the circumstances a reasonable time had elapsed, so that the defendants
were liable for £325.)

Reasonable time?
When goods are delivered to the buyer on approval or on sale or return or other similar terms,
the property in the goods passes to the buyer if there is no rejection of the property after a
reasonable time.
This depends on the agreement and the nature of the goods (Poole v Smith's Car Sales (Balham)

Elphick v Barnes
On a sale or return transaction where buyer receives goods and they are soon damaged
through no fault of buyer, seller will bare the loss because no ownership has passed.
(A horse which was out on approval died during the approval period. Held: The seller could not
sue for the price.)

S.18 - Rule 5 - Unascertained or future goods


Carlos Federspiel v Twigg -- Appropriation
There is no appropriation until it is beyond the power of the seller to substitute goods.
(buyer ordered bicycles, seller made them and packed them away in crates w/ buyers name -
not sufficient, could still swap them)
A mere setting apart or selection by the seller of the goods which he expects to use in
performance of the contract is not enough. If that is all, he can change his mind and use those
goods in performance of some other contract and use some other goods in performance of
this contract.
He added that 'usually but not necessarily, the appropriating act is the last act to be performed
by the seller.' In Hendy Lennox Ltd v Grahame Puttick Ltd, Sellers sent B an invoice showing the
serial number of engines to be delivered to B, it was held that the engines had been
'unconditionally appropriated' to B's contract. Having sent the invoice identifying the particular
items to be delivered to B, S could no longer substitute them for other goods w/o B's consent.
At this point the sellers had done everything required of them under the contract of sale.

(S agreed to manufacture and sell a quantity of bicycles to B who paid for them in advance.
The bicycles were placed in crates marked with B's name. They were not 'unconditionally
appropriated' to B's contract and when S became insolvent the liquidator was entitled to
remove the bicycles from the crates and sell them to another customer, leaving B an unsecured
creditor)

Unconditionally appropriated
Carlos Federspiel:
Unconditional appropriation requires - an irrevocable identification of the goods the assent of
both parties. The contract can specify what amounts to appropriation, but often the
identification and assent will be by the seller physically taking the goods to the buyer and the
buyer accepting them, or the buyer going to the seller and collecting the goods. It is not
sufficient for the seller merely to label goods or to store them separately (unless this is
specified in the contract) since this leaves the possibility of the seller changing their mind and
substituting other goods.

Rule 5(2) / Wardar's (Import & Export) Co Ltd v W Norwood & Sons
Where the seller delivers goods to an independent carrier or bailee for transmission to the
buyer, he is to be taken as having unconditionally appropriated the goods to the contract
unless he reserves a right of disposal of the goods (s.18 r5(2)); Wardar's (Import & Export) Co
Ltd v W Norwood & Sons

Thus if S puts goods in the post for delivery to B he will be taken to have unconditionally
appropriated them to the contract. Conversely, if S gives goods to an independent carrier but
makes them deliverable to himself or his agent, he has retained control over them and they
are not unconditionally appropriated to the contract.
Delivery of the goods to a carrier will only be treated as an appropriation of them to the
contract with B if the carrier is independent of S.
(Sellers had 1,500 cartons frozen kidneys of which they had sold 600. In the morning, S's agent
gave B's carrier delivery note authorising him to collect 600 cartons. Carrier went to the cold
store at 8am and found 600 cartons on the pavement. The cartons loaded onto lorry. Loading
completed at noon. After morning tea break at 10am carrier noticed the cartons dripping. He
switched on lorry refrigeration which became effective at about 3pm. When signing for the
cartons at noon, carrier added a note "in soft condition". When the cartons arrived in Glasgow
next day, kidneys were unfit for human consumption. B sued S for damages for breach of
implied conditions - fitness for purpose and merchantable quality - and sellers sued buyers for
the price. Held: that this was a sale of unascertained goods. Therefore property could not pass
until goods were ascertained. This had taken place when the 600 cartons were taken out of
cold store and placed on the pavement some time before 8am. Property in the goods and
therefore the risk passed to B either when the goods were placed on the pavement, or at the
latest when B's agent called at 8am, presented his delivery docket and began loading. In either
view, damage occurred subsequently and B therefore bore the loss and had to pay the price.)

S.18, Rule.5 (3) and 5(4): ascertainment by exhaustion / Wait and James v Midland Bank
Where there is a sale of part of an identified bulk the goods can be ascertained 'by exhaustion'
where the bulk is reduced by prior deliveries to an amount equal or less than the contract
quantity, and the buyer is the only buyer to whom the goods are due (s.18, r.5(3)) ... or where
a single buyer purchases the whole bulk in separate contracts, and the parties intend property
to pass - s.18, r.5(4) Karlshamns Oljefabriker v Eastport Navigation Corp: The Elafi.

No further act of appropriation will be required since the seller cannot fulfill the contract by
delivering any other goods.

(Wait and James v Midland Bank - Buyers purchased 1,250 quarters of wheat under three
separate contracts from a bulk held in a warehouse. Buyers took delivery of 400 quarters of
their order and, over time, following deliveries to other purchasers, only 850 quarters of the
original bulk remained in the warehouse, all of which was originally owned by the sellers. Held:
the wheat remaining in the warehouse had been ascertained as the quantity of goods agreed
to be sold by the sellers to the buyers and that the property had passed.)

s.19
If the seller attaches conditions to the appropriation, property will not pass even though the
goods are ascertained. For example, if the contract stipulates that the seller retains property
in the goods until the buyer has paid, property will only pass when the condition has been met
Pignataro v Gilroy
Where goods of the correct quality and description are appropriated by the S and the S sends
notice of that appropriation to Buyer, in the event of the buyer neglecting to reply to that
notice promptly it must be inferred that he assents to the appropriation, and on the expiry of
a reasonable time the property must be deemed to have passed.
Put another way, buyer cannot extend the period under which the seller is at risk by refusing
to take delivery.

S.20A / re Stapylton Fletcher


S.20A: Buyer will be an owner in common of the bulk (unless the parties agree otherwise) if
the 3 following circumstances are present:
1. There is a sale of 'a specified quantity of unascertained goods' that form part of a bulk
(meaning, say, a quantity of '500 tons of wheat' and not 'half the cargo of wheat'.)

2. The bulk source is identified in the contract or by subsequent agreement (bulk is 'a mass or
collection of goods of the same kind which is contained in a defined space or area and is such
that any goods in the bulk are interchangeable with any other goods therein of the same
number or quantity)

3. The buyer has paid all or part of the price - s.20A(6).


The effect of s.20A is to make the buyer co-owner of the bulk, as having obtained an "interest"
in the bulk, "rather than owner of any particular goods." Interest in the goods is not the same
as property in the goods that are the subject of the contract, thus the risk does not pass. He
however obtains a measure of protection if the seller becomes insolvent after the buyer has
paid for the goods. When goods are delivered to a buyer out of the bulk, those goods will then
be ascertained and property in them will pass to the buyer.
*Note that s.16 still applies to those goods for which the buyer has not paid so that property
in them cannot pass until they become ascertained.

(Sellers were wine merchants who stored wine for their customers. Though specific cases were
not earmarked for individual purchasers, detailed records were kept of the wine bought by
each customer and the customers' wine was kept separate from the company's own stock.
Held: the separation of the wine from this stock rendered it sufficiently ascertained to enable
property to pass with the customers owning it as tenants in common.)

Shares exceed the bulk (s.20A(4))


Where the bulk has diminished through, for example, natural wastage, the total shares owned
by the tenants in common will exceed the size of the bulk and each buyer's share will be
reduced proportionately (s.20A(4)).
A co-owner, who receives no more than is due under the contract, is not liable to any other
co-owner for taking delivery and is not liable to compensate where there is a shortfall in the
delivery to another co-owner (s.20B(2), (3)). The disappointed co-owner will only have a
remedy against the seller.
Where part of the bulk is not sold, any diminution of the bulk should be borne first by the seller,
Goode (2010, p.281) suggests.

Re London Wine Co. (Shippers) Ltd


Company sold wine to consumers as an investment and stored the wine on their behalf.
Purchasers paid the price and the costs of insurance and storage and, in return, received
certificates of title for the wine. The wine was stored in common, however, and was not
earmarked or designated for individual buyers. The seller subsequently went insolvent and the
buyers failed in their attempt to secure a proprietary right to the wine on the ground that, as
it had not been ascertained, the property in it had not passed to them.

#RISK#
Philip Head & Sons v Showfronts Ltd
Risk refers to loss, damage or theft in respect of the goods and it is usually the owner who will
have to bear the risk in situations where the goods are lost, damaged or stolen (subject to the
contractual terms).
Risk: S.20 (1)
The general rule is that risk follows property - the owner of the goods bears any loss -
irrespective of who has possession of the goods
Exceptions are where:

 the parties have agreed that risk should pass - Head v Tattersall. Further, parties may
even agree that risk will pass even though the goods are unascertained - Sterns v
Vickers Ltd
 the loss was caused by the fault of one party, thus he bears the loss - Demby Hamilton
& Co Ltd v Barden
 one party is the bailee of the goods and the loss occurs through bailee's lack of
reasonable care, in which case that bailee is liable - Wiehe v Dennis Bros
 the seller is required by the contract to send goods to the buyer, in which case delivery
to a carrier is presumed to constitute delivery to the buyer, who, therefore, bears the
risk of loss in transit - s.32.
Head v Tattersall
B took a horse on the understanding that he had the right to return it and end the contract if
the horse was not as described. It was not as described and B was entitled to his money back
though the horse was injured in his care through no fault of his own. Held, as the effect of the
contract was to vest the property in the buyer subject to a right of rescission if property had
not answered the description, at which point it would revest in the seller, as this was an
accident for which nobody is in fault the horse was at the seller's risk during the period allowed
for its return.

Sterns v Vickers Ltd


Held, whether the property in the undivided portion of the larger bulk had passed or not upon
the acceptance of the delivery warrant the risk passed to the buyers, and the loss must be
borne by them. What the buyers here are trying to do is to put the risk, after acceptance of the
warrant upon persons who had then no control over the goods (the sellers, as they had already).
For it seems plain that after the acceptance of that warrant the sellers would have had no right
to go to the storage company (third party) and request them to refuse delivery to the buyer.

The transfer of undivided interest carries with it the risk of loss to the goods, such as
deterioration in quality, after the seller has given the buyer a delivery order. The vendor of a
specified quantity out of a bulk discharges his obligation to the buyer as soon as the third party
undertakes to the buyer to deliver him that quantity from the bulk.

The acquisition of an undivided interest in a larger bulk will not suffice to pass the property
when the appropriation to the contract has to be made by the seller himself, that is, property
will not pass where it is the seller who has to set aside or deliver (appropriate) the portion
being purchased by the buyer as opposed to the property remaining until the buyer collects it.

(Seller sold 120,000 of 200,000 gallons of spirit to the buyer. The spirit was in a storage tank
under the control of a third party, a bailee. The buyer was given a delivery order which was to
be handed to the third party. However, the buyers had decided to leave the goods in the tank
for some time for their own convenience, by which time the spirit had deteriorated. The buyers
had obtained a delivery order accepted by the third party to whom the storage tank belonged.
No property in the goods could pass to the buyer until the spirit had been drawn off from the
bulk. (s.16 - no property may pass unless and until the goods are ascertained) and therefore it
must seem that the risk, which passes with the property, must be with the seller. The CoA
found that the risk passed to the buyer when the buyer handed the delivery order to bailee.
The bailee had attorned - acknowledged that he now held on behalf of B. The bailee held the
spirit on behalf of S and Buyer after receiving the delivery order in proportion to their interest
80,000/120,000. Risk therefore passed before the property in this case on the basis of implied
intention.)
Demby Hamilton & Co Ltd v Barden
s.20(2): Where delivery has been delayed through the fault of either the buyer or seller, the
party at fault must bear the risk of any loss which might not have occurred but for the delay.
(buyer bought 30 tons of apple juice, and took delivery of 20.5 tons. He failed to give
instructions for the delivery of the rest, which went putrid. The court held that the buyer was
at fault and therefore had to bear the loss)

Wiehe v Dennis Bros


The general rule that risk follows property will not apply where one party is the bailee of the
goods and the loss occurs through their lack of reasonable care, in which case the bailee will
be liable - s.20(3)

Where property and risk have passed to the buyer, however, the seller retains possession of
the goods, the latter will be the bailee. A bailee's duty is to take reasonable care of the goods
in his custody and, as such, he will ordinarily be liable only for loss or damage caused by his
negligence.

(Buyers contracted to buy a Shetland pony, delivery in a month. While the pony was in the
sellers' possession it was taken to an event, mishandled and injured. Held: Sellers were liable
for failing to take reasonable care as bailees of the goods)

Consign
To give goods to another to sell usually w/ the understanding that the seller will pay the owner
for the goods from the proceeds.

Property, Risk and Frustration cases


Re Wait (1927)(CA)
Unascertained goods: property cannot pass to the buyer at the time of contract.

Rowland v Divall (1923)(CA)


It is important to have good title before you attempt to sell.
Butterworth v Kingsway Motors (1954)
Where the seller breaches s12(1), the buyer may reclaim their full purchase price

The Aliakmon (1986)(HL)


Property can be dictated by the contract. You only owe a duty to the current owner, not future
owners

Sterns v Vickers (1923)(CA)


Risk passes according to express provisions. Even if goods are unascertained.

Demby Hamilton v Barden (1949)(KB)


(apple juice) The delay must be the cause of the damage.

Wiehe v Dennis Bros (1913)


The sellers were liable for not taking proper care as bailees pending delivery.

Couturier v Hastie (1856)(HL)


Initial impossibility. A contract is void if the subject matter didn't exist by the time the
contract was made.

McRae v CDC (1950)(AusHC)


A non-existent good cannot perish. Breach of implied terms that the goods existed at the time
the contract was made.

Re Goldcorp Exchange (1995)(PC)


Unascertained = no property can pass.

Re London Wine (1986)(ChD)


A certificate of ownership does not give you a property right. Must be ascertainment.

Re Stapylton Fletcher (1994)


Keeping sold goods separate from unsold goods can constitute ascertainment. Moved from
one warehouse to another.

Customs and Excise v Everwine (2003)(CA)


Where the buyer bought all the stock of a type that the seller's agent held, property had
passed. There was no passing of property where there was more than what was bought and no
separation had taken place.

Moving to a bonded warehouse is unconditional appropriation.

Re Blyth shipbuilding (1926)(CA)


The courts will give effect to the contract, even though the intention usually inferred is the
opposite.
Re Anchor Line (1937)
Express provision for the early passing of risk, but not one for property, so it was inferred
that property had not passed.

Dennant v Skinner and Collum (1948)(KBD)


Auction sales are complete when the hammer falls (s57) so property passes then.
Ward v Bignall (1967)(CA)
"in modern times very little is needed to give rise to the inference that the property in specific
goods is to pass only on delivery or payment"

Kursell v Timber operators (1927)


Early 'deliverable state' case. Spoke about it being physically deliverable.

Underwood v Burgh (1922)


Early 'deliverable state' case. Spoke about it being physically deliverable.

Philip Head v Showfronts (1970)(QBD)


'Deliverable state' = the state contracted for.

Carlos Federspel v Twigg (1957)


Putting goods in a crate with the buyer's name on was not 'unconditional appropriation'

Kulkarni v Manor Credit (2010)(CA)


Unconditional appropriation only takes place when the seller hands over possession to the
buyer or a third party.

Wait & James v Midland Bank (1926)


Ascertainment by exhaustion is possible. (1)

The Elafi (1982)


Ascertainment by exhaustion is possible. (2)