THIS PAPER IS NOT TO BE REMOVED FROM THE EXAMINATION HALLS

UNIVERSITY OF LONDON LA2017 ZA

LLB
DIPLOMA IN THE COMMON LAW
BSc DEGREES WITH LAW

Commercial law

Wednesday 6 June 2018: 10.00 – 13.15

Candidates will have THREE HOURS AND FIFTEEN MINUTES in which to

answer the questions.

Candidates must answer FOUR of the following EIGHT questions.

Candidates must answer all parts of a question unless otherwise stated.

Permitted materials
Students are permitted to bring into the examination room the following
specified document: one copy of Core Statutes on Commercial & Consumer
Law (Palgrave Macmillan).

© University of London 2018

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1. “A theme that runs through our law of contract is that the reasonable
expectations of honest men must be protected.” Per Steyn J First
Energy Ltd v Hungarian International Bank [1993] BCC 533.

Assess the extent to which English commercial law embodies this

theme.

2. Paulina owns a garage business which services, repairs and

occasionally sells cars and vans.

Due to other commitments, Paulina is unable to run the business full-

time and appoints Aaron, who has worked for her for five years as one
of three mechanics, to the role of ‘garage manager’. Aaron is given a
badge stating his new title and a new uniform to distinguish him from
other staff. Paulina tells him only to “keep things ticking over for me”.

Aaron has entered into the following agreements:

(a) A contract for a new fault diagnosis system at a cost of

£2,500; and

(b) A contract to refurbish the customer waiting area for a cost

of £5,000; and

(c) A contract with a tyre manufacturer under which their usual

price is discounted by 20% subject to a minimum order of
£5,000.

Paulina has now learned of these agreements. She feels that the first
two contracts are unaffordable and does not wish to be bound by them.

Advise Paulina.

3. In Watteau v Fenwick [1893] 1 QB 346, Wills J said: “once it is

established that the defendant was the real principal, the ordinary
doctrine as to principal and agent applies — that the principal is liable
for all the acts of the agent which are within the authority usually confided
to an agent of that character.”

Wills J’s decision is often criticised, but the law has nevertheless
effectively reached this position.

Discuss.

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4. Solent Ltd is a manufacturer of screws and agreed to sell to Brunswick
Ltd 50,000 M5 precision machine screws, tolerance (length) not more
than 0.5mm for £100,000 (including a 20% discount). The screws were
despatched from Solent’s warehouse in Manchester for delivery to
Brunswick in London.

The contract was made on Solent’s written standard terms which include
the following clauses:

(a) The Seller excludes liability for any and all implied terms or
warranties as to the quality, fitness, durability or suitability
of the goods supplied.

(b) The Buyer will inspect the goods and notify any defects to
the Seller within two working days.

(c) The Seller will replace any defective goods on a like-for-

like basis without charge (Buyer liable for all carriage
costs). No replacement goods will be offered where
defects are notified more than five working days after
delivery.

Solent’s standard terms contain no other express terms as to quality and

fitness.

The parties have not previously contracted with each other. Solent did
not draw any particular terms to the attention of Brunswick. Both are
sizeable, specialist businesses dealing regularly in goods of this type.
Brunswick inspected the screws eight working days after receiving them
from Solent. Half of the screws are longer than specified by more than
1mm and Brunswick wish to reject the entire order.

Advise Brunswick.

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5. Lusso is a supplier of coffee and coffee machines. Its standard written
terms of business contain the following clause:

“The seller hereby reserves title to: all goods supplied under this
contract; all goods mixed with, manufactured or derived from or
incorporating goods supplied under this contract; the proceeds of
any sale or disposition of the goods supplied under this contract,
which it is agreed are made by the Buyer as fiduciary agent of the
Seller.”

Lusso contracted to sell to Bragga Ltd eight 25kg sacks of raw coffee
beans and the goods were delivered to Bragga.

Four of the 25kg sacks of coffee beans were roasted. The roasted beans
were put back into the sacks in which they were originally supplied. The
sacks identify that they were supplied by Lusso.

The other four 25kg bags were mixed with 100kg of beans of lower
quality supplied by two other suppliers, roasted, ground and placed in
sealed 5kg bags ready for sale. Ten of the 5kg bags have been sold
and the £500 proceeds of sale are now in Bragga’s only bank account.

Bragga are now in insolvent liquidation. Lusso’s invoices for the goods
remain unpaid. Lusso are now seeking advice on the enforceability of
their retention of title clause.

Advise Lusso.

6. “Creditors have a wide range of distinct and effective securities available

to them in English law.”

Discuss.

7. “The reform of the law relating to the sale of goods brought a separate
regime for sale of goods by businesses to consumers but much of the
law pertaining to consumers is not new.”

Discuss.

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8. Gonzalo entered into an agreement to buy a freezer for his restaurant
from A1 Catering Supplies Ltd. The agreement with A1 Catering
Supplies provided for payment within 60 days of delivery and contained
a clause retaining title until payment was made in full. Gonzalo took
delivery of the freezer but could not afford to pay for it and sold it to Elina,
for £4,000. Elina paid for the freezer by cheque. The contract between
Elina and Gonzalo did not include a retention of title clause. Ten days
later, Gonzalo discovered Elina’s cheque had been dishonoured. He
could not contact Elina so instead informed the police.

The day after she bought it, Elina took the freezer to Silvio for servicing.
Silvio is a repairer of and occasional dealer in commercial catering
equipment. The next day, Elina was telephoned by Silvio to say that he
had received an offer of £5,000 for the freezer. This was completely
untrue. Elina said that she would be willing to sell the freezer for £6,000
and asked Silvio to do so if possible. Silvio put the freezer on display in
his showroom and sold it to Pavel for £5,000.

Pavel then sold the freezer to Jorge for £5,500. Jorge agreed he would
collect the freezer from Pavel’s warehouse the next day. Not aware it
had been sold to Jorge, a member of Pavel’s staff sold the freezer again
to Miranda for £4,500. Miranda paid for the freezer and took it away with
her.

A1 Catering Supplies are now seeking the return of the freezer from
Miranda.

Advise Miranda.

END OF PAPER

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