(6) Seller Remedies - Sales contracts
(6) Seller Remedies - Sales contracts
"what is a market?"
all determined at the time of breach
price determined by supply and demand, as opposed to being imposed or fixed - Charter v Sullivan  2 QB 117, WL Thompson Ltd v Robinson (Gunmakers) Ltd  Ch 177 - that's why u need multiple buyers
the availability of more than one buyer – Harlow & Jones Ltd v Panex International Ltd  2 Lloyds Rep 509
the possibility of disposition within a reasonable time – Aercap Partners 1 Ltd v Avia Asset Management AB  EWHC 2431 - the importance of this is relative .. Depending on what the goods are. If they are perishable goods then clearly what a reasonable time is much shorter than ie oil. No market if there is no ability for u to dispose / exchange of the assets before they are no longer valuable… and all of this is determined at time of breach (the comparative point for cts)
An available market
Where a buyer has refused to perform and the disappointed seller has the opportunity to resell the goods in an available market, it would be reasonable for her to do so
Therefore, if she does not, the buyer will be entitled to argue that he will not be liable for that failure
"an efficient market"
"In order for a major organized market to function efficiently…the system must be able to accommodate a large number of players... [and] a high degree of liquidity and an efficient settlement system which minimizes risk" (Goode 1991)
Ct will have to focus on a figure…. If there is a market like this one (that est a price), and provide information for ct, it will be used.
Where there is no market, there is no room for the application of s 50(3).
In such a case, the court reverts to the standard contractual methods for assessing damages- ie looking to estimate the seller’s loss
If its generic goods like grain, there is likely a market …
This can be done by:
Looking at the resale price if sold to a substitute buyer (this will be an estimation of the mkt price)
Asking whether the seller has in fact lost anything at all – ie, whether the market is such that the buyer’s breach has caused no loss [compensatory principle]
Sometimes the ct will look at individual loss of the claimant.
(I) remedy: action for the price
NOTE: BE GUIDED BY S49. BUT MAKE SURE AWARE OF PST ENERGY
AfP is important bc it gives u an action in debt rather than action in dges. AiDebt is not subject to rules in miti remoteness and penalties. AiDges is…
AS A SELLER, U WANT AFP.
v impt remedy, specific to sales k. it is what makes the k of sale so unique and powerful remedy. Sellers want their contract to be known as sales k. once u have action for price, it is debt. Debt is more valuable than claim fr damages.
What do you do to determine if AfP is available? Distinguish possession, property, price. Don't look for delivery.
Look at terms of k. s49(2)
Action for price must be DISTINGUISHed from action for dges.
A for dges: ct: how much are we going to give the party had they been in the position before (??) idk what she's saying
Action for price: ask for THE SPECIFIC SUM in the first place. [V IMPT REMEDY FOR SELLERS]
Debt: THIS ACTION for THIS PARTICULAR SUM
:star: s49 SOGA
PST Energy 7 Shipping LLC v OW Bunker Malta Ltd  UKSC 23 – the subsections of s 49 are not exhaustive. For example, a seller may also sue where the risk has passed to the buyer under the contract and the goods are then lost, destroyed or consumed. SC said s49 just sets out instances of when there can be AfP, but its not exhaustive, it can apply in this situation as well.
s 49 (1) Sale of Goods Act 1979 – where property has passed to the buyer under the sale and the buyer wrongfully neglects or refuses to pay
Property must have passed
Buyer must have acted wrongfully in not paying - ie the price must have become due. But see Colley v Overseas Exporters Ltd  3 KB 302 (where buyer’s own default prevented property from passing) - property was deemed to pass under the contract when goods were loaded on a ship nominated by buyer. Buyer never nominated a ship so the goods just sat at the port. When seller tried to sue for price, seller said buyer stopped property from passing. Ct agreed w buyer: there is no afp bc property had not yet passed. The fact buyer's default prevented property from passing is irrelevant. Seller limited to claim in dges (not as good as afp).
s 49 (2) - where the contract deems payment to be due on a day certain irrespective of delivery and the buyer wrongfully neglects or refuses to pay
Where the contract stipulates for payment a date that can be objectively identified, even though property has not passed or goods not yet appropriated to the contract
Again, buyer must have acted wrongfully in not paying
This is a provision designed to facilitate cash flow for sellers.
The afp will still be upheld if that was what was in the k. contract/cl law is about protecting certainty and parties knowing where they stand. If both parties agreed date of payment, both will know when u will be liable fr payment. But if people cannot anticipate when they will be paid, it will be messy…
NEED to look at claimant's behavior. Courts WILL consider what is the reasonable course of action for that claimant to have taken. This is often known as duty to mitigate..
The claimant is often said to have a “duty to mitigate”.
In strict legal terms, it is not a duty as such, since a breach of it does not amount to a legal wrong.
Essentially, all this really means is that loss is irrecoverable where it should reasonably have been avoided by the claimant [the ct may not take into account all ur losses… ct can say you could have saved yourself the money by selling it off… there is an expectation u will behave like a reasonable commercial entity to reduce ur losses]
This only applies for actions for damages and does not apply for action for the price (???????) HUH?
:star: Viscount Haldane LC in British Westinghouse Electric and Manufacturing Co Ltd v Underground Electric Rlys Co Ltd  AC 673, 689
still the most impt authority can always use this if discussing mitigating behaviour of claimants… see from quotation RE: compensatory principle (if k was performed… and about loss that flows from breach hedley baxendale)
As James L.J. indicates, this second principle does not impose on the plaintiff an obligation to take any step which a reasonable and prudent man would not ordinarily take in the course of his business. But when in the course of his business he has taken action arising out of the transaction, which action has diminished his loss, the effect in actual diminution of the loss he has suffered may be taken into account even though there was no duty on him to act.” - its about what a reasonable commercial entity in the claimant's position would have reasonably done
Defined in s 38(1) SOGA:
Where whole price has not been tendered (if seller refuses a tender, it loses its remedies)
Where conditional payment (eg bill of exchange) has been dishonoured
Where credit has been extended by seller to a buyer who is now insolvent
NB – an unpaid seller is not one who has delivered goods to a solvent buyer, and has not yet been paid because she has extended credit
Always give legal technical def of unpair seller. NOT an unpaid seller even if u have not been paid.
UNPAID seller only if the buyer has defaulted.
(II) Contractual damages for non-performance
s 50 (1) Sale of Goods Act 1979 – damages available for non-acceptance where buyer wrongfully fails to accept and pay for goods
Seller can sue for dges
s 50 (2) SGA – measure of damages is the estimated loss directly and naturally arising from the defendant’s breach of contract (well-known as the first limb of Hadley v Baxendale, outlined earlier)
State version of remoteness rule (earlier slide) - hadley
Directly and naturally: NEED TO USE HADLEY AND ARCHILLEAS …. It doesn't matter your discerning power. Just learn how to apply. The result u come to is not impt as long as it is tenable. Know the provision, the cases, and this is the basic measure.
:star: s 50 (3) SGA – this outlines a particular rule for sales cases, which is the presumptive market price rule. [v impt default rule]
CT will look at in order to decide what position you would have been in if the k was performed is the
difference between (what u were going to sell the goods for) and (market price at dobreach)= fulfilling compensatory principle
If at dob u know u cannot sell to buyer, seller can resell on mkt if u know k will not be performed. If this open market price on DOB is lower than original k price, the ct can assess the difference of price.
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 at the time or times when the goods ought to have been accepted or (if no time was fixed for acceptance) at the time of the refusal to accept
NB the seller’s actual foregone profit is irrelevant to this calculation – see Glencore Energy UK Ltd v Cirrus Oil Services Ltd  EWHC 87
This is an that the court makes doesn't bother about potential profits made, it only looks at the OBJECTIVE DIFFERENCE: what a third party would see in a k, and the market value. Glencore says explicitly it will not look at profit of the seller.
Claims against the buyer – for price or damages for breach
Claims against the goods – for security