contract in class notes week 11

7/18/2019 Contract in Class Notes Week 11

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Contract In class Notes Week 11

Seller’s contractual remedies

Termination for sale of goods different from traditional termination. It wasn’t very clear at the time

the sale of goods act was enacted that prospective obligations are gone.

The agreement is avoided in the Sale of Goods Act Not totally prospective can have some

retrospective effects. But this is not what we say anymore

Action for Price

- Arises when the obligation arises

- If parties don’t say when the obligation arises, then the obligation arises when property has

passed

No double recovery doesn’t mean you can’t get both damages and sue for price if the cost is

different

Notes and Questions

1. Seller’s Remedies. Basically, the seller’s contractual remedies are:

a. action for the contract price;

b. damages for breach of contract;

c. termination for breach of contract;

d. rescission for misrepresentation, duress, undue influence, unconscionability, etc (Contract

Law 1).

The seller may also have non-contractual remedies. We will not be dealing with proprietaryremedies. Bear in mind that the seller may also have remedies in tort law (deceit/negligence or

statutory tort) for fraudulent or negligent misrepresentation (recall Misrepresentation topic

from Contract Law 1)

2. Termination. Termination of contract (note the language of “acceptance of repudiation” or

“treating the contract as repudiated” etc in the sale of goods context) is an important remedy in

the common law allowing the innocent party to walk away from the transaction. Generally, if

the buyer has repudiated the contract – by wrongfully rejecting the goods or if the buyer’s

payment obligation is made a condition and has been breached – the seller can terminate the

contract and sell the goods to another, rather than give the buyer another opportunity to

perform. Termination revests title in the seller if it has been transferred to the buyer (though

probably not for goods previously unconditionally accepted by the buyer under an instalmentcontract); this is a peculiar feature of sale of goods law (but note that it is not rescission ab initio

– the seller still has claims for damages and/or price). If the buyer commits an anticipatory

breach, termination is also an important remedy for the seller to move on to other transactions.

3. Action for Price. The SOGA makes special provisions on the availability of the seller’s right to

purchase price and damages for breach of contract. Two types of contracts need to be

distinguished. In the default case where payment and delivery are concurrent obligations, the

seller’s monetary remedies are defined with reference to the question whether property in the

goods has passed to the buyer. Note that property passes when the parties intend to do so, and

by default upon the formation of the contract for specific (ie, identified) goods. Property can

pass before delivery, ie, the buyer may own the goods before taking delivery from the seller.

The position is:



a. The seller may sue for the price where property has passed and the buyer has accepted the

goods (s 49(1) SOGA);

b. The seller may sue for damages where property has not passed and the buyer refuses to

accept the goods (s 50(1) SOGA);

c. The seller may sue for the price or for damages where property has passed and the buyer

refuses to accept the goods (ss 49(1) and 50(1) SOGA).4. Consider the following situations:

a. A contracts to sell B 5 identified Arowana fish for $1,000 each, to be delivered in two

weeks time. Two weeks later, B takes delivery but refuses to pay. Can A sue B for the price?

Property normally passes when contract is made (if the good is a specific good)

>Takes delivery: 49(1) of property passed = yes

b. A contracts to sell B 5 identified Arowana fish for $1,000 each, to be delivered in two

weeks time. The parties agree that property will pass upon delivery. Two weeks later, B

wrongfully refuses to take delivery. Can A sue B for the price?

>Property pass upon delivery. No delivery = no passing = no. (general rule is that

dependent on construction of ctt, although prima facie rule is that property passes uponformation of the ctt ref SGA s18(1))

Also, contract does not expressly state when payment is due.

c. A contracts to sell B 5 identified Arowana fish for $1,000 each, to be delivered in two

weeks time. Two weeks later, B wrongfully refuses to take delivery. Can A sue B for the

price?

>based on prima facie rule, use 49(1) that property passes upon formation of contract=

yes.

Nothing said about when price is payable.

*wrongful act of buyer has no impact on whether property passes (esp ref b) confined to

action for damages Colley v Overseas Exporteres

5. Where, however, the obligation to pay the price arises independently from delivery of the

goods, then the action of price will be available from the time the obligation to pay arises (s

49(2) SOGA). Consider the following:

a. A contracts to sell B 5 identified Arowana fish to be delivered in two weeks time. $5,000 is

payable upon the conclusion of the contract. Two weeks later, B takes delivery but refuses

to pay. Can A sue B for the price? (Yes) Contract says so

b.

A contracts to sell B 5 identified Arowana fish to be delivered in two weeks time. $5,000 ispayable upon the conclusion of the contract. Two weeks later, B wrongfully refuses to take

delivery. Can A sue B for the price?

Obligation to pay has a arisen so he can sue for price but again, A is in posession

>Yes 49(2)

c. A contracts to sell B 5 identified Arowana fish to be delivered in two weeks time. $5,000 is

payable upon the conclusion of the contract, but property to pass only upon delivery. One

week later, B tells A that he will not accept delivery (in breach of contract). A accepts the

repudiation. Can A sue B for the price? See Hyundai Heavy Industries Co Ltd v

Papadopoulos [1980] 1 WLR 1129. Does B have a counterclaim? Would it make a difference

if the contract is to rear 5 identified Arowana fish and to sell them to B?



>Yes, Can sue on the basis of 49(2) but B has counterclaim in total failure of consideration

Property has not passed yet but on the basis of 49(2). But because A gets the money and

the fish, B can counterclaim for a total failure of consideration.

>Yes, would make a difference because rearing is part of the consideration. Like Hyundai,manufacture of ship. So no total failure of consideration and B has no counterclaim.

Workman Clark & Co Ltd v Lloyd Brazileno

Facts Contract for sale and construction of ship, payment to be instalments of completion

Holding “a day certain” ascertained by reference to the stage which had been reached in the

construction of the vessel. Instalments payable on a day certain

Hyundai Heavy Industries Co Ltd v Papadopoulos

Facts Contract to design, build, sell ship. Price payable by instalments

Holding Buyer able to sue for instalment despite seller exercise a contractual right ofcancellation after >Buyer must pay although hasn’t received goods. However, was a

contract for manufacture as well as sale (not pure sale) so consideration present in the

form of manufacture = may be distinguished

d. A contracts to sell B 5 identified Arowana fish to be delivered in two weeks time. $500 is

paid upon the conclusion of the contract as a deposit, and the balance of $4,500 is payable

after delivery. One week later, B tells A that he will not accept delivery (in breach of

contract). A accepts the repudiation. What can A claim against B?

B is not liable to pay for the future obligations of the $4500.

What about the $500? Remains with A unless it is penal in some sense or unreasonable. This is selfhelp.

6. What is the advantage of suing for price over suing for damages? Note that an action for price

does not totally preclude an action for damages; what is excluded is double recovery. For

example, the seller may incur additional storage costs as a result of the buyer’s refusal to take

delivery (see s 37 SOGA).

Advantages of price: it’s a certain price, you bypass all the rules of mitigation, remoteness etc.

7. Damages. The seller may sue the buyer for damages for failure to accept the goods (or

repudiatory breach of the contract) (see s 50(1) SOGA). Read s 50(2) SOGA for the generalprinciple. What is its relationship to Hadley v Baxendale? Read s 54 SOGA: what does it add to s

50(2)? Does The Achilleas have any effect on the measure of recoverable damages?

50. —(1) Where the buyer wrongfully neglects or refuses to accept and pay for the goods, the seller

may maintain an action against him for damages for non-acceptance.

(2) The measure of damages is the estimated loss directly and naturally resulting, in the ordinary

course of events, from the buyer’s breach of contract. (Hadley v Baxendale Limb 1)

(3) Where there is an available market for the goods in question, the measure of damages is prima

facie to be ascertained by the difference between the contract price and the market or current price

of the goods at the time or times when they ought to have been accepted or (if no time was fixed foracceptance) at the time of the refusal to accept.



Hadley v Baxendale Limb 2

54. Nothing in this Act affects the right of the buyer or the seller to recover interest or special

damages in any case where by law interest or special damages may be recoverable, or to recover

money paid where the consideration for the payment of it has failed.

Savings: rules of law, etc.

62.

(2) The rules of the common law, including the law merchant, except in so far as they are

inconsistent with the provisions of this Act, and in particular the rules relating to the law of principal

and agent and the effect of fraud, misrepresentation, duress or coercion, mistake, or other

invalidating cause, apply to contracts for the sale of goods.

So can the achilleas be applied? Based on 62(2), is it inconsistent with the statute?

Are reliance, wrotham park etc ruled out? 50(2)

Is it exclusive? Nope.

(damages may include:)

37. —(1) When the seller is ready and willing to deliver the goods, and requests the buyer to take

delivery, and the buyer does not within a reasonable time after such request take delivery of the

goods, he is liable to the seller for any loss occasioned by his neglect or refusal to take delivery, and

also for a reasonable charge for the care and custody of the goods.

In summary:

Property passed Buyer accepted Seller can sue for price: s49(1)Property not

passed

Buyer refuses to accept the

goods

Seller can sue for damages,

s50:(1)

Property passed Buyer refuses to accept the

goods

Seller can sue for price OR

damages: s49(1), s50(1)

8. Very often the obligation of the buyer is not spelt out as the purchase of a fixed amount of

goods. This can have an effect on the assessment of expectation damages because of the

general principle that the defaulting party is not expected to perform beyond his minimal

contractual obligations. Consider:a. B contracts to buy from A 500 bales of wheat plus or minus 10% at the buyer’s option. If B

wrongfully refuses to take delivery of any wheat at all, on what basis would the seller’s

damages be computed: (a) 500 bales; (b) 550 bales; or (c) 450 bales?

i. [What is he obliged to do, based on minimal performance]

b. B contracts to buy from A 500 bales of wheat plus or minus 10% at the seller’s option. If B

wrongfully refuses to take delivery of any wheat at all, on what basis would the seller’s

damages be computed: (a) 500 bales; (b) 550 bales; or (c) 450 bales?

i. Plaintiff has to proof the losses

ii. 550 bales of wheat, permitted under the contract; will say that under

contract

iii. Again, what is the buyer obliged to pay? 550



c. B contracts to buy from A 9,000 Widgets of Type X, Y and Z. A sells Widget X at $1, Widget

Y at $2 and Widget Z at $3. B wrongfully refuses to take delivery of any Widgets. On what

basis would A’s damages be computed? See Paula Lee Ltd v Robert Zehil Ltd [1983] 2 All ER

390.

If really minimal, 1 of Y, 1 of Z, 8998 of X.>reasonable selection of a mix of the rejects. Implied that the widgets would be chosen in a

manner reasonable.

d. The prima facie measure of loss is spelt out in s 50(3). Read the provision carefully. What is

an “available market”? What is the rationale behind the “available market” rule? What

assumption does it make about the loss caused by the breach? What assumption does it

make about the demand for and (the seller’s) supply of the goods? Consider:

Primary rule: when they ought to have been accepted. (Look at the time of the contract). If no time

was fixed, then time of the repudiation.

Seller expected to mitigate his losses – by going into the market. Available market means that there

must be a substitute buyer. If there is an available market, go for the difference He’s expectation

loss.

Available market:

o “Situation in the particular trade in the particular are was such that the where

particular goods can be freely sold and there was a demand sufficient to absorb

readily all the goods that were thrust on it so that if a purchaser defaults the goods

in question could readily be disposed of” –Dunkirk Colliery Co Ltd v Lever

Thompson Ltd v Robinson (Gunmakers) Facts Excess of supply over demand: Argument that no difference between market

and contract price (2nd hand car same as new car) = no loss = nominal damages

Holding 50(3) only laid down a prima facie rule and rule could not be applied. If

plaintiff was able to dispose off all the cars he could obtain, loss of profit

because he could make 2 sales (also in Charter v Sullivan)

>onus is on seller to prove that sales have been lost even under the economic

law of diminishing returns.

o Question of whether the seller can reasonably find a substitute purchaser, must try

to do so in accordance to mitigation principles.

If resale is less than market price: may wish to claim difference in damages.

Must find some very convincing reason why he should have resold at lessthan market price, otherwise, will only recover the difference between

market price and contract price

If resale is higher: Seems logical that if must cover loss, can also keep profit,

but since loss is counterbalanced by profit, court may hold otherwise: no

clear authority except Campbell Mostyn (Provisions) Ltd v Barnett Trading

Co: entitled to recover the different between contract and market price and

did not have to account for the greater price at which he had sold the goods

o Market should be place at which the goods were to be delivered under the contract

o Market price should be date of breach. If not specified, tendency is to look at market

price at the time when the goods should have been accepted.

o Unique goods (e.g. 2nd

hand car in Lazenby Garages Ltd v Wright): no availablemarket: may be able to claim special damages depending



A sells famous “Slam Dunkin’ Donuts” from a shop at Raffles City, and ever y day queues

form snaking all the way from SMU at Bras Basah Road. By the time B gets to the sales

counter at 4 pm, he realises that he has forgotten to bring his wallet. Fortunately, A and

B are friends, and A agrees to buy 5 boxes at $20 each (A’s standa rd price) to be paid

when collected just before closing at 7 pm. At 5 pm, B calls A to say that he does not

want the donuts after all since his party has been cancelled, and A accepts therepudiation. What has A lost, if (a) A sells out all his (fixed supply for the day) donuts by

7 pm; (b) A sells out all his donuts (flexible supply operating at maximum capacity) by 7

pm; (c) A has ten boxes left at the end of the day? Assume that the profit from the sale

of each box (revenue minus cost) is $12, and that A maintains a freshness policy by

donating all unsold stock to charity at the end of each day.

a) A has lost nothing. He did not contract to sell to B at a higher price.

b) Again, A has lost nothing.

c) The boxes that he was intending to sell to B are still in his hands. There is no

remaining value. Strict freshness policy. He would have 5 boxes less and $60 more.

Suppose A offered to pay at $30

a) $50? b) $50 c) $150??? (subject to cost)

Why is there a difference??? A’s loss – difference between contract price and market price.

If there is no market to absorb, the boxes are still there, what A has lost is the lost sale. In

the first 2, it was not a lost sale, it was losing the profit on the sale.

There could be incidental costs though.

e. Consider the following: how would the “available market” rule apply? How might it be

displaced?

i. A contracts to sell B a DVD player at $100, to be delivered three weeks from the date of

contract, property passing upon delivery. Three weeks later, B wrongfully refuses to

take delivery. There has been no change to the market price of the DVD player in the

market. What damages is A entitled to?

1. Cannot sue for price because property has not passed

2. 50(3) tells us that prima facie = market price – contract price = 0

3. A can argue that this particular player was not sold? A must argue

that he lost a sale; suffered the “loss of a sale”. Not profits on a sale.

A must argue that supply is exceeding demand. But he still gets

nothing.

ii. A contracts to sell B a HD-DVD player at $600, to be delivered three weeks from the

date of contract, property passing upon delivery. Three weeks later, B wrongfully

refuses to take delivery because Toshiba announces the abandonment of the HD-DVD

format. At that time shops are selling the player is selling at $50. What damages is A

entitled to?

1. Cannot sue for price

2. Damages. $550 because of difference between contract price and

market price. A is expected to sell it off at $50. Expectation loss is

$550.

3. No point



iii. A contracts to sell B a Blu-Ray DVD player at $900, to be delivered three weeks from the

date of contract, property passing upon delivery. Three weeks later, B wrongfully

refuses to take delivery. At that time shops are selling the player at $1,000 because of a

surge in the demand after Toshiba announces the abandonment of the HD-DVD format.

What damages is A entitled to?

1. Cannot sue for price2. Damages. Effectively means nothing.

3. What if we say that there is no available market, then what is the

value of that DVD player. If the value is more than $900, nothing. If

it is less, than he has lost something.

f. In e., what if B has already paid a deposit of 10% of the sale price?

i. If it is reasonable, A can keep the deposit.

g. In e., what would be the relevance of any evidence that the market price may be higher for

the goods in, eg, (1) Malaysia; (2) Mongolia?

>Market outside the place of delivery. Doesn’t make a difference cos time and place fixed

for delivery ref Dunkirk Colliery

Reasonable mitigation needs to be within a reasonable market

It would make adifference if he was selling online and was for instance shipping.

h. The “available market” rule is premised on the hypothetical actions by the seller after the

buyer’s breach of contract in not accepting the goods (why?). What happens if the seller

has actually gone into the market?

i. A contracts to sell B a Widget for $200, property to pass on delivery three weeks later.

Three weeks later, the market price for the Widget has fallen to $170, and B wrongfully

refuses to take delivery. A immediately sells the Widget for $150 at his closing-down

sale, as his lease of the shop terminates in a few more days. What damages is A entitled

to?

1. Cannot sue for price

2.

S50(3) means he can only get $303. A’s actual loss is $50? Must ask ourselves whether A has acted

reasonably in selling the goods at $150. If the answer is yes, then A

gets $50. If the answer is no, then the answer would be $30.

ii. A contracts to sell B a Widget for $200, property to pass on delivery three weeks later.

Three weeks later, the market price has held steady, but B wrongfully refuses to take

delivery. A sells the Widget for $250 to a tourist. What damages is A entitled to? Does it

matter at what point of time A actually sells the Widget?

None. No difference between contract price and market price. No difference point of

time at which A sells Widget, cos A is making a speculation on market in holding onto

the goods: independent of mititgating steps

Even if the market price has dropped, HE HAS ACTUALLY MITIGATED HIS LOSS. So there

is no need to look at reasonableness.

i. If the goods are unique in the sense that there are no market substitutes, then the

“available market” rule cannot apply. Consider:

i. A contracts to sell to B a poodle named Poocch (it comes with a certificate of identity,

authenticity and pedigree) for $5,000, property to pass on delivery three weeks later.

Three weeks later, B wrongfully refuses to take delivery. Nobody else wants to buy

Poocch. What damages is A entitled to?

>no available market, damages = diff between ctt price and value of the goods = difficult

to assess



ii. A contracts to sell to B a used grand piano for $5,000, property to pass on delivery three

weeks later. Three weeks later, B wrongfully refuses to take delivery. A sells the piano

to C for $4,000. What damages is A entitled to?

>1,000. value of the piano = 4000 (selling price) used grand piano may be considered

unique property (ref 2nd hand car considered to be so).

Quaere: did he act reasonably in selling it for $4000

iii. A contracts to sell B a CPU casing painted according to B’s specifications (ie, with ugly

splotches of black and red), for $200, property to pass on delivery. B wrongfully refuses

to take delivery. Nobody else is likely to buy the casing, but a similar casing without

painting costs $150 in the market. Removing the paintwork would cost $150 and bring

the value of the casing down to $100. What damages is A entitled to? What if B

repudiates the contract before A has started work painting the casing (which would

have cost A $30), and A accepts the repudiation immediately?

>unique goods 50(3): different between ctt price and value of CPU casing. Nobody else

is likely to buy casing = entitled to $200 value of ctt – market value. If can alter and sell,

should do so to mitigate his losses. Therefore, A can claim $150 cost of altering thegoods (special damages) + diff between contract price and market price of casing (200-

100 =$100) = A would can to claim $250 if he’s obliged to alter casing = not reasonable

to expect A to alter casing.

His loss is 50-30 = 20

j. The “available market” rule measures the loss to the seller at the time the goods ought to

have been accepted if a date is fixed for acceptance or the date of actual refusal otherwise.

This is also a prima facie rule. It is frequently referred to as the “breach date” rule. Note

the distinction between the time of refusal to accept delivery and the time when the goods

ought to have been accepted . Consider:i. A contracts to sell B a Widget for $2000, property to pass on delivery three weeks later.

Three weeks later, the market price has fallen to $1,500, and B wrongfully refuses to

take delivery. A then offers a 10% discount off the contract price to B if B would pay by

cash instead of credit card. After two months of haggling, B still refuses to take delivery

with or without discount. By that time, the market price has fallen to $1,200. What

damages is A entitled to?

1. S50(3): Prima Facie, A is entitled to $500

2. But actual price is now $1200. So A has to argue that he acted

Reasonably (Payzu)

ii. A contracts to sell B a Widget for $2000, property to pass on delivery three weeks later.

A week later, the market price has fallen to $1,500, and B calls A to cancel the contract.A rejects the repudiation. At the time due for delivery, the market price has fallen to

$1,200. What damages is A entitled to? Read Millett v Van Heeck [1921] 2 KB 369.

1. Breach date rule is very important.

iii. A contracts to sell B a Widget for $2000, property to pass on delivery three weeks later.

A week later, the market price has fallen to $1,500, and B calls A to cancel the contract.

A accepts the repudiation immediately. At the time due for delivery, the market price

has fallen to $1,200. What damages is A entitled to?

1. If we apply s50(3) we, A gets $800.

2. But he should mitigate by selling on the date of acceptance of the

repudiation.

3. For anticipatory breach, it is very difficult to apply s50(3) without

some modification.



iv. A contracts to sell B a Widget for $2000, property to pass on delivery three weeks later.

A week later, the market price has fallen to $1,500, and B calls A to cancel the contract.

A accepts the repudiation immediately. At the time fixed for delivery, the market price

has risen to $1,800. What damages is A entitled to?

k. Another aspect of the “breach date” rule is that damages should be assessed based on

facts known at the date of the breach (or date of acceptance in the case of anticipatorybreach), or perhaps shortly thereafter. This is a prima facie rule, but thought to be

applicable in most commercial cases until recently in English law. Read Golden Strait Corpn

v Nippon Yusen Kubishika Kaisha (The Golden Victory) [2007] 2 AC 353. Consider:

On 1 January 2005, A contracts to sell B 10 lobsters a month for 5 years at $90 per

lobster for B’s restaurant business at Punggol. After B has failed to pay for the first

year’s supply entirely, the parties agree that this amounts to a repudiatory breach

justifying termination of the contract at common law, and A terminates the contract

accordingly on 31 December 2005. On that date the market price of lobsters has fallen

to $80 per piece and analysts predict that they are expected to hover around the same

price for the next four years. The parties attempt negotiation and mediation to settle

their dispute but without success. On 31 December 2006, a law is passed prohibiting thesale of lobsters in Singapore by anyone other than the Lobster Trading Authority. The

parties agree that the contract would have been frustrated on that date if it had not

already been terminated. It is only on 1 July 2007 that A commences action against B.

What period’s losses would B be liable to A for?

9. Specific Performance? It will be unusual for a seller to be asking for specific performance,

because the seller is usually content with the action for price (which is a form of specific

relief after all). Moreover, most sale of goods contracts involve generic goods, and between

the remedies of action for price and damages for breach the seller is likely to be satisfied.

However, there may be cases where the seller may not be able to sue for price (see N&Q 3-5

above). In 8.(i)(i) above (“Poocch”), should the seller be entitled to ask for specific

performance? See Re Wait [1927] 1 Ch 606 at 635-636, and compare with s 52 SOGA.

Seller’s Contractual Remedies

1. Termination for breach of contract

• Termination of contract (note the language of “acceptance of repudiation” or “treating thecontract as repudiated” etc in the sale of goods context) is an important remedy in the

common law allowing the innocent party to walk away from the transaction.

• Generally, if the buyer has repudiated the contract (by wrongfully rejecting the goods or if

the buyer’s payment obligation is made a condition and has been breached) the seller can

terminate the contract and sell the goods to another, rather than give the buyer another

opportunity to perform.

• Termination revests title in the seller if it has been transferred to the buyer (though

probably not for goods previously unconditionally accepted by the buyer under an

instalment contract); this is a peculiar feature of sale of goods law (but note that it is not

rescission ab initio – the seller still has claims for damages and/or price). If the buyer

commits an anticipatory breach, termination is also an important remedy for the seller tomove on to other transactions.



2. Rescission for misrepresentation, duress, undue influence, unconscionability etc (Ref ctt 1)

3. Action for the contract price

49. —(1) Where, under a contract of sale, the property in the goods has passed to the buyer and

he wrongfully neglects or refuses to pay for the goods according to the terms of the contract,the seller may maintain an action against him for the price of the goods.

[*Shows that generally property passes upon formation of contract unless otherwise specified.

Not dependent on acceptance /delivery of goods but is an obligation to be able and willing to

deliver. Wrongful act of buyer has no impact on whether property passes]

50. —(1) Where the buyer wrongfully neglects or refuses to accept and pay for the goods, the

seller may maintain an action against him for damages for non-acceptance.

(damages may include:)

37. —(1) When the seller is ready and willing to deliver the goods, and requests the buyer to

take delivery, and the buyer does not within a reasonable time after such request take deliveryof the goods, he is liable to the seller for any loss occasioned by his neglect or refusal to take

delivery, and also for a reasonable charge for the care and custody of the goods.

In summary:

Property passed Buyer accepted Seller can sue for price: s49(1)

Property not passed Buyer refuses to accept the goods Seller can sue for damages, s50:(1)

Property passed Buyer refuses to accept the goods Seller can sue for price OR

damages: s49(1), s50(1)

Exception:

49. — (2) Where, under a contract of sale, the price is payable on a day certain irrespective ofdelivery and the buyer wrongfully neglects or refuses to pay such price, the seller may maintain

an action for the price, although the property in the goods has not passed and the goods have

not been appropriated to the contract.

[*If specified that obligation to pay arises independently from delivery of the goods, action of

price will be available from the time the obligation to pay arises]

Workman Clark & Co Ltd v Lloyd Brazileno

Facts Contract for sale and construction of ship, payment to be instalments of completion

Holding “a day certain” ascertained by reference to the stage which had been reached in the

construction of the vessel. Instalments payable on a day certain

Hyundai Heavy Industries Co Ltd v Papadopoulos

Facts Contract to design, build, sell ship. Price payable by instalments

Holding Buyer able to sue for instalment despite seller exercise a contractual right of

cancellation after >Buyer must pay although hasn’t received goods. However, was a

contract for manufacture as well as sale (not pure sale) so consideration present in the

form of manufacture = may be distinguished

Advantages to seller for price over damages:

o Able to sue before delivery necessary.

o Seller no longer responsible for the resale /disposal of goods

o Can claim more especially if seller has made a bad bargain /change in market price.4. Damages for breach of contract



Damages for non-acceptance

50. —(1) Where the buyer wrongfully neglects or refuses to accept and pay for the goods, the

seller may maintain an action against him for damages for non-acceptance.

(2) The measure of damages is the estimated loss directly and naturally resulting, in the ordinary

course of events, from the buyer’s breach of contract.

(3) Where there is an available market for the goods in question, the measure of damages is

prima facie to be ascertained by the difference between the contract price and the market or

current price of the goods at the time or times when they ought to have been accepted or (if no

time was fixed for acceptance) at the time of the refusal to accept.

Available market:

o “Situation in the particular trade in the particular are was such that the where

particular goods can be freely sold and there was a demand sufficient to absorb

readily all the goods that were thrust on it so that if a purchaser defaults the goods

in question could readily be disposed of” –Dunkirk Colliery Co Ltd v Lever Thompson Ltd v Robinson (Gunmakers)

Facts Excess of supply over demand: Argument that no difference between market

and contract price (2nd hand car same as new car) = no loss = nominal damages

Holding 50(3) only laid down a prima facie rule and rule could not be applied. If

plaintiff was able to dispose off all the cars he could obtain, loss of profit

because he could make 2 sales (also in Charter v Sullivan)

>onus is on seller to prove that sales have been lost even under the economic

law of diminishing returns.

o Question of whether the seller can reasonably find a substitute purchaser, must try

to do so in accordance to mitigation principles.

If resale is less than market price: may wish to claim difference in damages.Must find some very convincing reason why he should have resold at less

than market price, otherwise, will only recover the difference between

market price and contract price

If resale is higher: Seems logical that if must cover loss, can also keep profit,

but since loss is counterbalanced by profit, court may hold otherwise: no

clear authority except Campbell Mostyn (Provisions) Ltd v Barnett Trading

Co: entitled to recover the different between contract and market price and

did not have to account for the greater price at which he had sold the goods

o Market should be place at which the goods were to be delivered under the contract

o Market price should be date of breach. If not specified, tendency is to look at market

price at the time when the goods should have been accepted.o Unique goods (e.g. 2nd hand car in Lazenby Garages Ltd v Wright): no available

market: may be able to claim special damages depending

• Specific performance: Will be unusual for a seller to ask because the seller is usually content

with the action for price (which is a form of specific relief after all). Moreover, most sale of

goods contracts involve generic goods, and between the remedies of action for price and

damages for breach the seller is likely to be satisfied. However, there may be cases where

the seller may not be able to sue for price. Re Wait argues that since buyer entitled to SP, by

principle of mutuality, seller should also be. But suggestion that “no act is exhaustive in

nature. Act did not intend to leave equitable principles that would undermine the act”

contract in class notes week 11

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