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(5) MISC (Risk (Section 20(1): the general position is that passing of…
(5) MISC
Risk
- Property n risk are linked but they certainly do nt have to be …. Can consciously divide property from risk. Whoever bears the risk suffers the loss. Commercial entities don't rly worry about who bears the risk. The certainty of this rule is the most important part. U just charge a bit more for insuring it.
Ewan McKendrick (ed), Goode on Commercial Law (2016) 266:
‘Goods are at a party’s risk if he has to bear the loss resulting from their damage or destruction. The impact of this will depend on whether the party in question is the seller or buyer.’
- Section 20(1): the general position is that passing of risk is linked to the passing of property :
‘Unless otherwise agreed, the goods remain at the seller's risk until the property in them is transferred to the buyer, but when the property in them is transferred to the buyer the goods are at the buyer's risk whether delivery has been made or not.’
BUT note effect of
Agreement to contrary: s 20(1)
Fault of buyer or seller: s 20(2)
Liability of buyer or seller as bailee: s 20(3)
Fault of B or S is addressed in s 20(2):
- ‘But where delivery has been delayed through the fault of either buyer or seller the goods are at the risk of the party at fault as regards any loss which might not have occurred but for such fault.
- The party who caused the delay will be deemed to have had the risk and thus be responsodible for bearing the loss… it is an exception to s20 default rule
Demby Hamilton v Barden [1949] 1 All ER 345
- DH sells apple juice to B. Juice is not collected punctually as agreed. Juice is no longer suitable for consumption and DH disposes of it. Risk was on B as collection was B’s responsibility
:star: Sterns Ltd v Vickers Ltd [1923] 1 KB 78
- V (seller) owned 200,000 gallons of white spirit which was stored on the premises of a storage company. V sells 120,000 gallons of the spirit to S (buyer). V obtains a delivery warrant from storage company which is passed to S. S then sold the spirit on to a third party
When the third party came to take delivery it was discovered that the spirit had deteriorated. Third party sues S; S in turn sues V
- Issue: who bore the risk of the goods deteriorating?
CA: S, the buyer, bore the risk
Irrespective of the passing of property in the goods from V to S, the risk had passed to S
Once S received delivery warrant it could demand delivery of the spirit from storage company: i.e. appropriation was a matter under control of S (buyer) [an example of property and risk not passing at the same time]
(What should happen with regard to passing of risk where s 20A applies? See Goode on Commercial Law 280–81) [RE: the undivided bulk regulations "risk should remain w the seller in the first instance"
bailees?
There is nothing in s20 that overrides obligations of bailees
Recall: disagreement wrt if the bailment was a set of rules in its own right … etcWiehe v Dennis Bros Bros (1913) 29 TLR 250
- W agrees to buy a Shetland pony, car and harness from DB
W intended to present pony to Dutch princess
Delivery due to take place after one month
Pony is injured in period before delivery to W
DB liable in bailment for failing to take proper care of the pony (before delivery) - an obligation is to take care of goods.
See s 20(3): nothing in s 20 affects bailee obligations that S may have to B, or vice versa
always consider bailment independent of s20 rules. Exists as a set of independent obligations
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"in common"
- To be contrasted with joint tenancy
- Joint tenants possess and own the whole
- Tenants in common share possession of the whole, but only own their share
Practical implications of tenancy in common
- s 20A gives to a buyer a tenancy in common right to the bulk, to the extent of any payment made
So, a buyer of 30 000 tonnes from a bulk of 100 000 tonnes, who has paid for 20 000 tonnes will be a tenant in common for 20 000 tonnes
Any goods removed by the buyer from the bulk will be deemed to come from her share, rather than having the effect of shrinking the whole
BUT
any shrinkage of the whole (for example, by loss or destruction) will be borne rateably by all co-tenants according to their respective shares.
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