Commercial Law free essay sample

First of all, the contract stipulates that ‘’Haks shall supply Yuippe with vintage Silex wines (2000) for a period of 12 months with the option of a further six months at the discretion of Yuippe. Under the term of the contract Haks is to deliver 4 instalments over twelve months with payment to be made 30 days after delivery . However, Yuippe breached express terms of the contract by not paying the first instalment because the contract stipulates that payment to make after 30 days of the delivery. In a commercial contract, the time of delivery is normally of the essence. If, the date is stipulated and if the buyer fails to give the payment that is a breach of condition. Therefore, the seller is entitled to repudiate the contract and sue for payment. In Hartley v Haymans [ 1902] 3 K. B. 475 the court was held that the time of delivery is a prima facie of the essence in commercial law. In Charles Rickards Ltd v Oenheim [ 1950] 1 K. B. 616 it was held that the notice had again made the time of essence. Section 61 of the SGA defines the delivery. In addition to, Yuippe requested Haks to make second delivery and would pay both instalments within 30 days of the second delivery to which Haks agreed. Yet, Yuippe did not settle the invoice with stipulates of 30 days but convinced Haks to make third delivery and Haks agreed to do that as well. A condition is an important or central term of the contract. In Bunge Corporation v Tradax SA [ 1981] 2 All ER 513 the commercial significance of punctual compliance with stipulation time must be taken into an account, so that at common law where the late payment is not repudiatory. Therefore, punctual payment is an essence of a condition. As discussing from this case, if punctual payment is a condition of a contract, then Yuippe breached the contract in first and second delivery. In any contract, each consignment was to be paid separately, and if the parties agree that then the court will take the contract as severable. In Jackson v Rotax Motor and cycle Co [ 1990] 2 K. B. 937 it was held that the buyer was entitled to accept the later delivery. In relation to severable contract, whether it is breach of condition in relation to one or more instalments entitles the innocent party to regard the whole contract as required or whether it confined to the instalments is a severable breach. In Withers V Reynolds (1831) 2 B amp; Ad 882, Court of King’s Bench the court was held that this was a repudiation which justified Reynolds in refusing further deliveries. In Maple Flock Co V Universal Furniture products (Wembley) [1934] 1 K. B. 148 the court held that whether the breach was a repudiatory depended on the two factors. First, the breach of the ratio bore quantitatively of the contract and the breach repeated in later instalments. In Smyth ( Ross) v Bailey [1940] 3 All E. R. 60 it was held that a sufficiently serious breach to be a repudiation of the whole contract. This situation is depending upon in circumstances. In the situation of Haks, under the terms of contract Haks is to deliver 4 instalments over 12 months with payment to be made 30 days after delivery. Moreover, it was a severable contract and Yuippe breached the contract at the time of first and second delivery. Haks can bring action against Yuippe for the breach claim for damage of ? 1. 5 million. S 49 of the SGA allows the seller to maintain an action for the price. First, as the term of the contract if the buyer has wrongfully refused or neglected to pay. Secondly, if the property has passed to the buyer or in a certain day the price is payable of irrespective delivery. The buyer’s failure to pay or refusal must have been wrongful. An action can be maintained if a particular date has been stipulated for payment after that date irrespective of whether the property has passed to the buyer. In Workman Clark v Lloyd Brazileno [ 1908]1 K. B. 968 it was held that at the relevant stages the seller could sue for instalments then due. Yuippe requested Haks should make the second delivery and would pay for the two instalments within 30 days of the second delivery. Advised to Haks could sue Yuippe for non payment Yuippe. Haks can bring action against for the breach and claim for damage of ? 1. 5 million. Moreover, Haks should also advised to bring an action against Yuippe for the breach and claim damage of ? 500,000. Section 38 of the SGA, defines as an unpaid seller. There are three options for unpaid seller such as lien, stoppage in transit and resale. Section 41 ,of the SGA 1979, deals with lien in relation to delivery by instalment. If the delivery is made by instalments, the extent of the unpaid seller’s lien, depend upon whether the contract is severable. If the seller in possession of the goods, the unpaid seller’s right of lien is his right to retain possession of the goods until the price is paid or tendered under s 41 (1) of the SGA 1979. Lien relates only to the price. In a severable contract goods are delivered by instalments which are to be paid separately. However, if the buyer’s failure to pay a repudiatory, breach of contract, not by virtue of lien, the seller can refuse the further deliveries. Upon dispatch of third delivery, but before delivery was made, Haks found out that Yuippe had serious financial problem and the business’’ could go under’’. The seller has right to stop of transit; stop the delivery from reaching the buyer. By the virtue of ownership, if the property is still to the seller then he will stop the goods. If, the buyer become insolvent then the seller has right of stoppage under s 39 (1) (b) and in s 44. Here, it can be seen fair and just mechanism for preventing goods which will not paid for being applied for paid to the debts of an insolvent buyer. The unpaid seller’s lien, the exercise of the seller of right of stoppage does not of itself withdraw of the contract of sale. It helps the seller to retake of possession of goods; the price is paid or tender until retaining them. In four circumstances, the seller can stop the delivery. S 44, of the SGA, provides that the seller can resume possession of the goods and retain them until the payment or tender to him. First of all, the seller must be an unpaid seller within the meaning of the act; the buyer must be insolvent, the goods must be in the course of transit, and the effect of sub-selling by the buyer on the seller’s right of stoppage. S 61 (4) of the SGA, is provides a definition of insolvency. Yuippe had serious financial problem and ‘business could go under. Where there is a merely rumours that buyer is insolvent or is in financial problem since it is far from clear whether this will be adequate for the exercise of stoppage. Therefore, Yuippe’s ‘business go under’ may give Haks the right to exercise of the stoppage. If Hanks wishes to stop the delivery, then he may h ave to find an alternative way. It is advised to Haks that he can bring an action against Yuippe for breach and claim for damage of ? 1. 5 million. Furthermore, Haks should bring action against Yuippe for the breach and claim damage of ? 500,000. Section 45, of the SGA 1979, deals with in the course of transit. Section 46, of the SGA deals with how of transit may be effect, whether the seller gives notice to the carrier or takes actual possession of goods The right of the stoppage, in transit to arise if the carrier is an independent contract such as independent shipping line or British Rail who has Possession, of the goods on his own behalf as carrier. If the carrier is the buyer agent, then transit never begins since the buyer has already possession of goods. While the goods are in the possession of an independent carrier, the goods remain in transit does not necessarily mean movement. In Tigress ( 1863) 32 LJM amp; A 97, Court of Admiralty it was held that the seller was acting within his right. Moreover, after exercising the stoppage right, under a duty, the unpaid seller to give to the carrier an instructions as to either the return or disposal of the goods. In Booth SS Co Ltd v Cargo Fleet Iron Co Ltd [ 1961] 2 K. B. 570 the court of appeal held that the carrier to be entitled to damages representing the amount of the freight. S 32 (1) this provision states that delivery to the carrier is prima facie deemed to be delivery to the buyer. Therefore, Haks is advised to stop the third delivery until got the payment. Because, Yuppie, requested Haks to make the second delivey and would pay for the two instalments within 30 days, of the second delivery. Yuppie did not settle the invoice within the stipulated of 30 days, after the second delivery. Therefore, Haks should request the carrier to stoppage the transit because he was an unpaid seller. In order to reduce the losses, Haks may stop the final delivery and think to resale the goods. Section 48 (2) of the SGA 1979 empowers the seller the right to resale. This subsection gives the unpaid seller to resell the goods after the exercise of unpaid seller’s right of lien or the stoppage. S 48 (2) of the SGA this statutory power only after arises if the unpaid seller exercised the right of lien or the right of the stoppage in transit. Seller can only resell the goods allowed by section 48 (3) and (4) of the SGA. In R v Ward Ltd v Bignall 2 All ER 449 contrasted the effect of Section 48 (2) and s 48 (3) which gives the seller to right to resell the goods. Of course, the seller will be concerned as to whether he can sell the goods against the first buyer, whether as well as he has a power to pass the title. The seller has right to resell as of right of initial contractual stages, if his obligation has not yet crystallized to deliver into an obligation to deliver any specific goods. Secondly, if the buyer repudiates the contract then the seller can resell the goods or accept that repudiation if he wishes, whether or not property has passed to the buyer. If, the seller does not accept the repudiation, he cannot resell the goods as of right unless this right is conferred by section 48 (3) and (4). Section 48 (3) and (4) deals with two situations, where the goods are perishable and where the goods are not erishable. The subsection modifies the effect of time of payment in s 10 of the SGA. In sale of perishables the seller is allowed to treat the contract as repudiated and to resell where unreasonably the buyer has delayed in paying for the goods. With non- perishables, notice to the buyer to make time of the essence is required, so only is given such notice and unreasonably the buyer has de layed then the seller has right to resell. In these circumstances, the buyer will be liable anyway in damages for the delay in payment. Under Section 48 (4), on the default of the buyer the seller has the right of resell, if expressly if he has reserved such a right in original contract. When, section 48 (3) and 48 (4) are compared, whereas section 48 (4) expressly provides in that a resale under that sub-section will rescind the contract, in section 48 (3) there is no parallel express provision. Whether a resale under section 48 (3) of perishables, non- perishables after notice it is not clear, will rescind the original contract of sale or not. The problem was first considered in this Gallagher v Shilcock [ 1949] 2 K. B. 765 case. The buyer failed to pay and the seller resold it. Under section 48 (3) where the seller resells the goods even part of the contract then the original contract of sale must be rescinded since the seller is incapable of performing that contract now. The court of Appeal explained the difference in wording of the two sub-sections on the ground that if the buyer failed to the payment is not a breach of justifying repudiation. However, if the seller has given notice to the buyer to pay up, time of the payment is made of the essence and thereafter failure to pay amounts to a repudiation which the seller accepts it by reselling the goods. In the light of the above discussion, it can be said that Yuppie failed to make the payment under the contract which would cause Haks to suffer a loss of ? 1. 5 million as a direct result of Yuppie’s breach. Haks will suffer a further ? 500, 000 losses if they do not pay the French winemaker and the grapes grower in the next two months. Therefore, Yuppie may be liable for ? 1. 5 million as a result of Yuppie’s breach. Haks is advised to take action for the breach by Yuppie and sue Yuppie for the damage of 1. 5 million. As Hans will further loss of ? 500, 000, therefore, in addition to suing Yuppie for the ? 00,000 as well. Haks is advised to stop the final delivery under the principle of the right of Lien, and they should resell the goods in order to reduce their loss