MLL215 Commercial Law Exam Notes

Table of Contents

THE SALE OF GOODS ........................................................................................................... 7

Governing Laws for the Sale of Goods .............................................................................................. 7

Governing Laws for Different Areas ................................................................................................. 7

Contracts for the Sale of Goods ......................................................................................................... 8

Key Elements of a Contract of the Sale of Goods ............................................................................. 8 A Contract ...................................................................................................................................................... 8 Sale ................................................................................................................................................................. 8 Sale or Agreement to Sell ............................................................................................................................... 9 Key Features of a Sale .................................................................................................................................... 9 Goods ............................................................................................................................................................ 11 Money (Price/Consideration) ....................................................................................................................... 13

Contracts of Sale Distinguished from Other Sales ......................................................................... 13 Contracts of Work and Materials ................................................................................................................. 13 Robinson v Graves (1935) ............................................................................................................................ 14 Deta Nominees v Viscount (1979) ................................................................................................................ 14 Aristoc Industries v Werham Builders (1965) .............................................................................................. 14 Collins Trading v Maher (1959)................................................................................................................... 14 Brookes Robinson v Rothfield [1951] .......................................................................................................... 15 Hewett v Court (1983) .................................................................................................................................. 15 Contract or Hire Purchase ........................................................................................................................... 15 Contract or Bailment .................................................................................................................................... 15

SALE OF GOODS: Transfer of Title..................................................................................... 15

Consequences of Transfer of Property ............................................................................................ 15

Transfer of Risk ................................................................................................................................ 15

Qualifications of the Presumptive Rule ........................................................................................... 16

Claiming the Price ............................................................................................................................ 16

Treating Conditions as Warranties .................................................................................................. 16

What does Transfer of Property not do? ......................................................................................... 16

Rules regarding Transfer ................................................................................................................. 16 Basic Rules of Transfer ................................................................................................................................ 16 Transfer of Specific Goods: Rule 1 .............................................................................................................. 17 Bodilingo Pty Ltd v Webb Projects (1990) ................................................................................................... 17 Transfer of Specific Goods: Rule 2 .............................................................................................................. 17 Underwood v Burgh Castle Brick (1922) ..................................................................................................... 17 Transfer of Specific Goods: Rule 3 .............................................................................................................. 18 Transfer of Specific Goods: Rule 4 .............................................................................................................. 18 Kirkham v Attenborough (1897) – Inconsistent Act ..................................................................................... 18 Poole v Smith’s Car Sales (Balham) Ltd [1962] – Reasonable Time .......................................................... 18 Weiner v Harris [1901] – Whether Sale or Return or Just Agent ................................................................ 18

Transfer of Unascertained Goods .................................................................................................... 19 Rule 5(1) Goods Act 1958 (Vic) ................................................................................................................... 19 Carlos Federspiel v Twigg & Co [1975] – Unconditional Appropriation .................................................. 19 Rule 5(2) Goods Act 1958 (Vic) ................................................................................................................... 20 Wardar’s v Norwood (1968) ........................................................................................................................ 20

TRANSFER OF TITLE: Continued ...................................................................................... 21

Retention of Title: Common Law and the Goods Act ..................................................................... 21 Retention of Title .......................................................................................................................................... 21

When does Risk Pass? ...................................................................................................................... 21 Allied Mills Ltd v Gwydir Valley Oilseeds Pty Ltd [1978] 2 NSWLR .......................................................... 21

Transfer of Title by a Non-Owner ................................................................................................... 22

Nemo dat Rule .................................................................................................................................. 22 Exceptions to Nemo dat Rule ........................................................................................................................ 22 Eastern Distributors v Goldring ................................................................................................................... 23 Lowther v Harris .......................................................................................................................................... 25 Car and Universal Finance .......................................................................................................................... 25 Pacific Motor Auctions ................................................................................................................................. 26 Gamer’s Motor Centre v Natwest................................................................................................................. 27

SALE OF GOODS: Implied Terms ........................................................................................ 28

Implied Terms by the Goods Act ...................................................................................................... 28

The Goods Act and the ACL ............................................................................................................ 28 ‘Consumer Guarantee’ ................................................................................................................................. 29

Excludability ..................................................................................................................................... 29

Conditions and Warranties .............................................................................................................. 29

Scope of Part 1 of the Goods Act ..................................................................................................... 30 Implied Terms relating to Title (Condition) ................................................................................................. 30 Niblett v Confectioners’ Materials [1921] 3 KB 387 ................................................................................... 30 Rowland v Divall .......................................................................................................................................... 31 Passing Title: Right to Sell ........................................................................................................................... 31 Patten v Thomas Motors Pty Ltd .................................................................................................................. 31 Quiet Possession (Warranty) ........................................................................................................................ 31 Microbeads A-G v Vinhurst Road Markings Ltd [1975].............................................................................. 31 Free from Encumbrances ............................................................................................................................. 32 Steinke v Edwards (1935) ............................................................................................................................. 32

Goods corresponding with Description............................................................................................ 32 Is it Sale by Description? ............................................................................................................................. 32 Grant v Australian Knitting Mills................................................................................................................. 32 What is the Description? .............................................................................................................................. 33 Varley v Whipp (1900) - Identity v Quality .................................................................................................. 33 Elder Smith Goldsborough Mort v McBride [1976] – Identity v Quality .................................................... 33 Harlingdon and Leinster Enterprises v Christopher Hull [1990] ................................................................. 34 Ashington Piggeries v Christopher Hill [1972]............................................................................................ 34 Beale v Taylor [1967] .................................................................................................................................. 35

SALE OF GOODS: Implied Terms (Continued) ................................................................... 36

Fit for Purpose .................................................................................................................................. 36 Element 1: Makes Particular Purpose Known ............................................................................................. 36 Element 2: Reliance on Seller’s Skill ........................................................................................................... 37 Henry Kendall v William Lillico [1969] ...................................................................................................... 37 Dowdell v Knispel Fruit Juices Pty Ltd [2003] FCA 85 .............................................................................. 37 Element 3: In the Course of the seller’s business to supply ......................................................................... 38 Element 4: When Assessed ........................................................................................................................... 38

Merchantable Quality ....................................................................................................................... 39 Hardwick Game Case ................................................................................................................................... 39 Examination of Goods .................................................................................................................................. 39 ‘Merchantable Quality’ Defined .................................................................................................................. 39

Sale by Sample .................................................................................................................................. 40 LG Thorne v Borthwick (1956)..................................................................................................................... 40

Duties of the Seller ........................................................................................................................... 41

Remedies of the Buyer ...................................................................................................................... 41

Duties of the Buyer ........................................................................................................................... 41

Remedies of the Seller ...................................................................................................................... 41

CONSUMER GUARANTEES ............................................................................................... 42

The ACL Objective ........................................................................................................................... 42

Consumer Guarantee’s .................................................................................................................... 42

Scope and Policy Objectives ............................................................................................................. 43 Intergovernmental Agreement for the ACL .................................................................................................. 43 Six Operational Objectives ........................................................................................................................... 43

Key Concepts ..................................................................................................................................... 44 (a) ‘Supply’ ............................................................................................................................................... 44 (b) ‘Consumer’ ......................................................................................................................................... 44 (c) ‘In Trade or Commerce’ ..................................................................................................................... 45 (d) ‘Manufacturer’ .................................................................................................................................... 45 (e) ‘Goods’ ............................................................................................................................................... 45 (f) ‘Services’............................................................................................................................................. 45

CONSUMER GUARANTEES: Guarantee Types and Remedies ......................................... 46

Consumer Guarantee as to Title ...................................................................................................... 46 Title: s 51 ...................................................................................................................................................... 46 Undisturbed Possession: s 52 ....................................................................................................................... 46 Undisclosed Securities: s 53 ......................................................................................................................... 46

Acceptable Quality ............................................................................................................................ 47 Exceptions ..................................................................................................................................................... 48 Process ......................................................................................................................................................... 48

Fitness for Purpose........................................................................................................................... 49 Examples....................................................................................................................................................... 49 ‘Fitness’ ........................................................................................................................................................ 49 Exceptions ..................................................................................................................................................... 49

Goods by Description: s 56 ............................................................................................................... 49 Correspondence with Description: s 56 ....................................................................................................... 50 Correspondence with Sample: s 57 .............................................................................................................. 50

Repairs and Spare Parts: s 58 .......................................................................................................... 50

Express Warranties: s 59.................................................................................................................. 50

Excluding Liability: s 64 & 64A ...................................................................................................... 51

Guarantee’s Relating to Services ..................................................................................................... 51 Three Examples ............................................................................................................................................ 51

Attempts to Limit Consumer Guarantees ........................................................................................ 52 Exemptions ................................................................................................................................................... 52

Remedies for Consumer Guarantees ............................................................................................... 52 Against the Supplier of Goods ...................................................................................................................... 52 Against the Manufacturer ............................................................................................................................. 52 Against the Supplier of Services ................................................................................................................... 52 Rejecting the Goods ...................................................................................................................................... 52 Compensation ............................................................................................................................................... 53 Obligations of Repairers .............................................................................................................................. 53 Goods or Services acquired before 2011 ..................................................................................................... 53

UNCONSCIONABLE CONDUCT: Part I ............................................................................ 54

Overview ............................................................................................................................................ 54

Unconscionability under the ACL ................................................................................................... 54

ACL Chapter 2: General Protections............................................................................................... 54 A Key Concept: Abuse of a Dominant Person .............................................................................................. 54 Applicable Laws ........................................................................................................................................... 55

Section 20 .......................................................................................................................................... 55

Unwritten Law: Unconscionable Conduct ...................................................................................... 56

Unconscionability within the meaning of the Unwritten Law: s 20 ACL ...................................... 56 Meaning of Unconscionability ..................................................................................................................... 57 Section 20 ACL ............................................................................................................................................. 57 CBA v Amadio (1993) ................................................................................................................................... 57 Special Disadvantage ................................................................................................................................... 58 Unconscionability: Berbatis Case ................................................................................................................ 59 ACCC v CG Berbatis Holdings Pty Ltd [2003] ........................................................................................... 59

UNCONSCIONABLE CONDUCT: Part II ........................................................................... 61

Section 21 .......................................................................................................................................... 61

Statutory Unconscionable Conduct ................................................................................................. 61

‘Unconscionable’ .............................................................................................................................. 62

Section 21 and 22 of the ACL .......................................................................................................... 62 Two Elements................................................................................................................................................ 63 Unconscionability: Knowledge .................................................................................................................... 63 ACCC v Radio Rentals Ltd (2005) ............................................................................................................... 63 Defence ......................................................................................................................................................... 63 Key Cases ..................................................................................................................................................... 63 ACCC v Samton Holdings (2002) ................................................................................................................ 63 ACCC v Zanok Technologies [2009] ........................................................................................................... 64 Kakavas v Crown Melbourne Ltd [2013] ..................................................................................................... 64

Statutory Unconscionability: s 21 .................................................................................................... 65 Consumer ...................................................................................................................................................... 65 Section 21 and 22 ......................................................................................................................................... 65 ‘Unconscionable’ Meaning .......................................................................................................................... 66 ACCC v Lux Distributors Pty Ltd (2013) ..................................................................................................... 66 ACCC v Keshow (2005)................................................................................................................................ 67 ACCC v Simply No Knead (2000) ................................................................................................................ 67

Section 22 (Matters the Court may have regard for the Purposes of s 21...................................... 68 ASIC v National Exchange Pty Ltd (2005) ................................................................................................... 68 Enforcement and Remedies .......................................................................................................................... 68 Time Limits and Remedies ............................................................................................................................ 68

UNFAIR CONTRACT TERMS ............................................................................................. 69

Unfair Terms: Elements ................................................................................................................... 70 Element 1: Consumer Contract .................................................................................................................... 71 Small Business Contract ............................................................................................................................... 71 Element 2: Standard Form Contract ............................................................................................................ 72 Element 3: ‘Personal, domestic and household’ .......................................................................................... 72 Element 4: ‘Supply of Goods and Services’ ................................................................................................. 73

Unfair Contracts: s 24 ACL ............................................................................................................. 73 Meaning of ‘Unfair’: Three Limbs ............................................................................................................... 73 First Limb: s 24(1)(a) ................................................................................................................................... 74 Second Limb: s 24(1)(b) ............................................................................................................................... 74 Third Limb: s 24(1)(c) .................................................................................................................................. 75 Meaning of ‘Unfair Term’ ............................................................................................................................ 75 Transparency: s 2 of the ACL ....................................................................................................................... 75

Meaning of ‘Unfair’: s 24(2)(b) and s 24(4) ................................................................................................ 75 Examples of Unfair Terms ............................................................................................................................ 76 Director of CA Vic v AAPT Ltd [2006] VCAT ............................................................................................. 77 ACCC v Bytecard Pty Ltd (Federal Court, 24 July 2013, VID310/2013) .................................................... 77

Remedies ........................................................................................................................................... 77 Enforcement .................................................................................................................................................. 78 Exclusions: Contracts not covered ............................................................................................................... 78 Exclusions: Terms Excluded ......................................................................................................................... 78 Contract Terms Exempted from the UCT Provisions: s 26 .......................................................................... 79 Consequences ............................................................................................................................................... 79

INSURANCE CONTRACT FORMATION AND PRE-CONTRACTUAL ISSUES ........... 79

Introduction ...................................................................................................................................... 79

Types of Insurance ........................................................................................................................... 80 Sources of Insurance Law ............................................................................................................................ 80

Insurance Contracts Act (ICA) ........................................................................................................ 81

Central Concepts .............................................................................................................................. 81 Key Elements of Insurance Contracts .......................................................................................................... 81 ‘Insurable Interest’ ....................................................................................................................................... 81 Macaura v Northern Assurance Co [1925] .................................................................................................. 82 ‘Utmost Good Faith’ .................................................................................................................................... 82 Moss v Sun Alliance Aust Ltd (1990) 55 SASR 145 .................................................................................... 83 Remedies for failure of ‘Utmost Good Faith’ ............................................................................................... 83

Formation: Pre-Contractual Issues ................................................................................................. 83 Steps of Formation ....................................................................................................................................... 84 Duty of Disclosure: Origins ......................................................................................................................... 84 Carter v Boehm (1766) ................................................................................................................................. 84 Duty of Disclosure: Insured’s ...................................................................................................................... 84 Guardian Assurance v Condogianis [1921] ................................................................................................. 85

Interim Insurance Contracts ............................................................................................................ 88

Duty of Disclosure: Insured’s .......................................................................................................... 88 21st Maylux Pty Ltd v Mercantile Mutual Insurance (Australia) Ltd [1990] VR 919................................. 88 Macfie v SGIO (Qld) (1985) 3 ANZ Ins Cas 60-606 ................................................................................... 89

Duty of Disclosure: Insurer ............................................................................................................. 89

Misrepresentation ............................................................................................................................. 90 Misrepresentation: Exclusions ..................................................................................................................... 90 Misrepresentation: Remedies ....................................................................................................................... 90

General Insurance: Remedies .......................................................................................................... 90 Stealth Enterprises Pty Limited Trading as The Gentleman’s Club v Calliden Insurance Limited [2015]

NSWSC 1270 ............................................................................................................................................... 91

Remedies: Life Insurance ................................................................................................................ 92

Remedies: Materiality ....................................................................................................................... 93

Remedies: Fraud .............................................................................................................................. 93 Ayoub and Anor v Lombard Insurance Co (Aust) Pty Ltd (1989) 5 ANZ Ins Cas 60-933 .......................... 93 Burns v MMI-CMI Insurance Ltd (1995) 8 ANZ Ins Cas 61-287 ................................................................ 94

Remedies: Proportionality ................................................................................................................ 94

INSURANCE CONSTRUCTION AND PERFORMANCE ................................................. 95

Construction ..................................................................................................................................... 95 Words ............................................................................................................................................................ 95 Legal & General Insurance v Eather (1986) ............................................................................................... 95

Exclusions ..................................................................................................................................................... 95 Warranties .................................................................................................................................................... 96 Minimum Standard Cover ............................................................................................................................ 96 Non-Standard Cover ..................................................................................................................................... 96 Flood............................................................................................................................................................. 97 Expiration, Renewal, Cancellation ............................................................................................................... 97 Claims ........................................................................................................................................................... 97 Claims – Who ............................................................................................................................................... 98 Claims – Insured........................................................................................................................................... 98 Claims – Third Parties ................................................................................................................................. 98 Insured’s and Insurer’s Obligations ............................................................................................................ 99

Performance ..................................................................................................................................... 99 Insured’s Obligations ................................................................................................................................... 99 Breach of Warranty by Insured .................................................................................................................. 100 Insurer’s Remedies – s 54 ........................................................................................................................... 100 Ferrcom v Commercial Union Assurance (1993) ...................................................................................... 102 Moltoni Corporation Pty Ltd v QBE Insurance (2001) .............................................................................. 102 FAI Insurance v Perry (1993) .................................................................................................................... 103 Antico v CE Health Casualty & General Insurance Ltd (1996) ................................................................ 103 FAI General Insurance Co Ltd v Australian Hospital Care Pty Ltd (2001) .............................................. 103 Johnson v Triple C Furniture & Electrical Pty Ltd (2010) ........................................................................ 104 Maxwell v Highway Hauliers Pty Ltd [2014] ............................................................................................ 104 Fraudulent Claims ...................................................................................................................................... 105 Cancellation ............................................................................................................................................... 106 Averaging ................................................................................................................................................... 106 Subrogation ................................................................................................................................................ 107 Double Insurance ....................................................................................................................................... 107 Insurance Contracts Amendment Act 2013 (Cth) ....................................................................................... 107 Outmost Good Faith ................................................................................................................................... 108 Electronic Communication and Powers of ASIC ....................................................................................... 108

THE SALE OF GOODS

Governing Laws for the Sale of Goods

▪ A mix of common law and statute law.

▪ Common law on sale of goods codified in: ▪ Sale of Goods Act 1893 (UK) ▪ Each State adopted this Act but there are some minor differences

▪ In Victoria – Goods Act 1958. All other states – Sale of Goods Act (note: Traves refers to the Qld Sale of Goods Act)

▪ Legislation and consumers ▪ Australian Consumer Law 2010 (Cth) ▪ Australian Consumer Law and Fair-Trading Act 2012 (Vic)

Governing Laws for Different Areas

▪ The formation of the contract (mainly common law) ▪ Misleading conduct, duress, unconscionable conduct and unfair terms (mainly by the

ACL) ▪ The passage of property in the car and other key performance obligation (mainly by

the Goods Act)

▪ Remedies for breach of obligations (mainly by the ACL) ▪ Manufacturer’s liability for defects in the Goods (the ACL and the common law) ▪ Credit and security issues (various statutes); ▪ International sale of goods – the Vienna Convention

Contracts for the Sale of Goods

▪ The Goods Act only applies to contracts for the sale of goods. ▪ The Act defines a contract of sale of goods as follows: The Goods Act s 6(1)

▪ ... a contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a money consideration called the price…

Key Elements of a Contract of the Sale of Goods

▪ To be covered by the Goods Act, there must be: ▪ A contract; ▪ Sale ▪ Property (Title, Ownership) ▪ Goods; ▪ Money (price).

A Contract

• The transaction involved must be a contract – a consensual agreement to buy and sell. Pfizer v. Ministry of Health [1965] AC 512 at 535 (the supply of drugs to a patient under the national health scheme was not a sale.

o Upon payment of the fee, the patient had a statutory right to the drug rather than a contractual one.).

▪ E’ v. Australian Red Cross Society & Ors (1992) ATPR 41-156 (the Plaintiff had no contract with the Red Cross. Rather, the plaintiff had a contract with the hospital for the supply of nursing service.

• If the contract is not deemed contractual, then the sale of goods act does not apply.

o Section 8 of the Act: a contract of sale may be made – ▪ In writing or by orally (many contracts for the sale of

goods are oral contracts.) ▪ Partly in writing and partly orally, or ▪ Implied from the conduct of the parties. ▪ There are no formalities required to create a binding

contract (exceptions: auction sales and provisions dealing with capacity).

▪ Section 4(2), a contract will be formed according to the ordinary contract rules of offer and acceptance.

Sale

• The contract must be one of sale 3(1). o “Contract of Sale” is defined to include a sale, as well as an agreement to sell:

S.6(3) and 6(4).

▪ In a sale, the property in the goods is transferred from the seller to the buyer at the time of the transaction.

• There are two steps here: o (1) a contract; and o (2) a conveyance of property in the goods.

• Example: David bought a printer from the Officework – David paid money at the cashier of the Officework and took the printer home afterwards.

• Contract of Sale”: An agreement to sell. o In an agreement to sale, however, the property in the goods is to be

transferred in the future or is conditional: s.6(3). ▪ There is merely a contract here.

• Once the property in the goods is transferred, the agreement to sell becomes a sale: s.6(4).

o Example: Wendy orders free range eggs from a farm up in the Dandenong Mountain in Melbourne. She places order to buy on Wednesday and the farm owner delivers eggs to her door on Friday.

Sale or Agreement to Sell

• Whether a contract is a sale or an agreement to sell affects the remedies available where a breach of the contract occurs.

o A sale: may sue for the price agreed as property in goods has passed to the buyer. ▪ S.55. An agreement to sell: the seller’s remedy is damages; may or may not

be the contract price.

• It if is a sale, title to the property is transferred straight away. o E.g. buying chocolate at the supermarket.

▪ If it is an agreement to sale, property is passed later on when the goods are delivered.

• E.g. Wendy and her eggs example on last slide. o An agreement to sell can gives rise to remedies.

▪ If it is a sale, the buyer may seek special performance, if damage is not a sufficient remedy.

• If it is an agreement to sell, the purchaser cannot seek specific performance - only damages.

Key Features of a Sale

• The key feature of a sale is that it transfers the property in goods to the buyer. o The risk has passed to the buyer; o The seller can sue for the price; o The buyer can reject the goods. o The concept “property in goods” is an important one and will be discussed in

detail later

• Property, Title and Ownership o These three concepts are very similar and overlapping. In most contracts, they

will reside in the seller – “the goods belong to the seller at the time of sale”. ▪ “Property”: s 3(1) defines “property” to mean ‘the general property in

goods and not merely a special property’.

• Property in the goods can pass to the buyer without conferring on the buyer a title to them that is good against third parties. (S.27)

o “Title” – refers to the ownership rights a person has against anyone else. ▪ “Title” will sometimes mean not true ownership, but, rather, a right to

the goods as against anyone else that a person can acquire under the Act, even though they did not purchase the goods from the true owner.

o “Ownership” – S.26 (“the true owner”) and S.27 (“the owner”) introduce the concept of “ownership”.

▪ It means, in the absence of any contrary arrangement (such as a sale, lease or bailment) the immediate right to possession of the goods as against any other person.

o What is property? ▪ Bundle of rights including possession and rights to benefit, Rights of

possession against anyone else Ownership. Which property does sale of goods apply to? see s 3(1).

o There are effectively two categories of property: ▪ (i) real property:

• Real property refers to land and the various property interests that can be held in land.

▪ (ii) personal property:

• Personal property relates to things, goods, chattels etc. o Personal property itself can be divided up into two categories:

▪ (i) things in possession; and

• Things in possession refers to goods or chattels – items that are tangible – that can be physically possessed.

▪ (ii) things in action. ▪ Things in action refers to legal rights – such as the property rights

that stem from owning intellectual property. ▪ Things in action can also refer to equitable rights in

present or future property (not covered in this unit).

• Relevance of Possession o Forms of possession:

▪ Custody – lowest form of holding goods ▪ Actual or De Facto – effective physical or manual control ▪ Legal Possession – state of being in possession ▪ Lawful Possession – Where the possession is not wrongful ▪ Constructive Possession – legal possession without actual possession ▪ The right to possession – legal right to de facto possession

o Interference with possession ▪ Trespass – wrongful taking ▪ Detinue – wrongly detaining it ▪ Conversion – wrongly disposing/selling of it ▪ Trespass – an action for trespass lies where at the time the goods were

wrongly taken, the plaintiff has an immediate right to possession ▪ Trespass to goods must be a wilful or negligent act – Manton v

Brocklebank [1923] 2 KB 212 ▪ You can lose possession but if you have title, you can regain possession

Goods

• The Sale must be for “goods”, not other forms of property. SG, p.6. o S.3(1) defines goods to include: “Chattels personal other than things in action and

money. ▪ The term includes emblements and thing attached to or forming part of

the land which are agreed to be severed before sale or under the contract of sale.”

o “Chattels” refers to physical objects that can be moved from one place to another.

▪ Goods include all ‘chattels personal’ other than:

• Chose in action – e.g. shares

• Money

• Specifically includes: o Emblements (annual crops grown to be harvested) o Items attached to land which are agreed to be severed

before sale. o Does not include real property and fixtures.

o S.2(1) of the ACL defines “goods” to include: ▪ Ship, aircraft and other vehicles; ▪ Animals, including fish; ▪ Minerals, trees and crops, whether on, under or attached to land or not; ▪ Gas and electricity; ▪ Computer software; ▪ Second-hand goods; and ▪ Any component part of, or accessary to, goods.

• Is Software Goods?

o Off the shelf computer hardware and software are goods – Toby Constructions Products Pty Ltd v Computer Bar Sales Pty Ltd [1983] 2 NSWLR 48.

▪ A disc containing software is goods – therefore if the program is defective, the goods are defective.

• Program code is not goods – e.g. sale of software delivered by online download – Gammasonics Institute for Medical Research Pty Ltd v Comrad Medical System Pty Ltd (2010) 77 NSWLR 479

• Classification of Goods o It is important to know how particular goods are classified in relation to the rules

related to the operation of the Goods Act. (Rules governing the transfer of property):

▪ Existing Goods: goods owned or possessed by the seller: s.10(1)

• Future goods – Not in the possession of the seller. o Future goods are defined in s3(1) as goods to be

manufactured or acquired by the seller after the making of the contract.

▪ Where a contract for sale deals with future goods, it is an agreement to sell goods – s10, Goods Act.

o Agreed upon at the time the contract of sale is made”. – e.g. this particular blue car (not a similar one).

▪ These are the unique goods subject to the contract.

• In the case of specific goods, property will pass when the contract for the sale of goods is made – unless the parties agree otherwise.

o Specific goods may be existing goods or future goods. ▪ E.g. Picasso (Lady in Blue) painting coming up for

auction – future goods because the seller does not yet hold the painting.

o Unascertained goods – (not defined in the Goods Act) an important concept referred to goods not specifically identified and agreed upon at the time the contract of sale is made.

▪ It is not possible to transfer property in unascertained goods; Without property in the goods, the seller cannot transfer title. [But see Nemo Dat]

• You cannot acquire title until it is known what the title relates to. o Unascertained goods become ascertained when the

seller has appropriated them to the contract.

• Fixtures: Generally, not to be Sold as “goods’ o Fixtures: they are the property of the owner of the land.

▪ Thus, a contract to sell fixtures is not a contract for the sale of goods unless the agreement is that the fixtures should be first be severed.

• If the fixtures are to be severed before sale, or under the contract of sale, the contract will come within the scope of the Goods Act.

o For example, a contract to remove a wooden house for relocation elsewhere would be a contract for the sale of goods.

• Unascertained Goods o Unascertained goods: Goods to be manufactured or grown by the seller; these

are necessarily future goods and purely generic goods such as 100 tons of rice. ▪ These will be future goods unless the seller already has sufficient

suppliers available to honour this contract.

• The unidentified part of a specific whole. o These may be future goods (seller not yet acquired

them) or existing goods (seller has them but has not yet allocated particular loads to the contract).

o Ascertained goods – are unascertained goods that have been specifically identified after the contract was entered.

▪ Note: These are not specific goods because they are only identified after the contract is made.

• For example, the sale of wheat from a silo – once it is loaded into a container, then it is ascertained.

o So, where the goods are in bulk, ascertainment does not occur until the goods are separated from the bulk.

▪ Re Stapylton Fletcher Ltd (in admin rec) [1995] 1 All ER 192 – ascertainment occurred because the customer’s wine was separated from the common stock and kept in another part of the warehouse.

• After the goods are ascertained the property is transferred as the parties

intend – Akron Tyres v Kittson (1951) 82 CLR 477

Money (Price/Consideration)

• The goods must be sold for “a money consideration called price”. o S 6(1): Must be a payment or promise of payment of money.

▪ An exchange or barter is not covered by the Goods Act.

• S 13(1): price may be: Fixed by contract, determined in a manner specified by the contract, determined by a past course of dealing.

o Note: s 14(1) ‐ valuation by third party.

• S 13(2): If the price cannot be determined, the purchaser must pay a reasonable price. A reasonable price may or may not be the “market price”.

o The cost of production may also be in a sense “reasonable”. ▪ A term as to a reasonable price can only be implied where the parties.

• Have reached agreement on all the other essential terms. o Barter is not under the Goods Act, but if goods are sold partly

for money and partly for some other form of consideration, the GA may still apply.

▪ For example, the sale of a car involving the trade‐in of the buyer’s old car.

Contracts of Sale Distinguished from Other Sales

• Contract for work and materials o Payment is for skill and effort,

▪ e.g. preparation of architectural drawings

• Note: A contract for work and incidental materials is NOT a contract of sale of goods.

o Payment is to acquire a good, e.g. sale of a car ▪ Contract for supply and installation of an article,

whether:

• A single contract for work and materials? Or

• 2 contracts: sale of goods and contract to install?

Contracts of Work and Materials

• Question is when property in goods pass o Judicial conflict in cases – goods form merely part of a contract for work and

materials OR separate from installation contract? ▪ 2 Tests:

• 1. The resulting chattel test o Lee v Griffin [1861] 1 B & S 272: concerned a contract for the

manufacture of dentures. B (dentist) contracted to make dentures for A. But A died after the dentures were made and after rejecting an appointment for a fitting. B sued A’s estate. Held: if a contract results in the sale of chattel, then it is a contract for the sale of goods.

o Test 2:

▪ The substance of the contract test – Robinson v Graves (1935) 1 KB 579: If the substance of the contract … is that skill and labour have to be exercised … and that it is only ancillary to it that some materials will pass from the artist to his client …. the substance of the contract is the skill and experience of the artist in producing the picture

Robinson v Graves (1935)

Facts

Plaintiff (Plf) was portrait painter. Defendant (Def) engaged Plf to paint portrait of his wife. Plf commenced painting. Def subsequently repudiated contract. Plf sued for breach of contract for sale of goods. Held (TJ): Oral contract for sale of goods (Plaintiff can’t enforce because not in writing).

Holding

Held (on appeal): Contract for the supply of services

Deta Nominees v Viscount (1979)

Facts

Deta had an oral contract with Viscount to manufacture a die for plastic extrusion. Deta supplied dimensions. Deta was to eventually obtain property in the die. Viscount threatened breach. Deta sued for specific performance. Issue: Contract for sale of goods (not enforceable if oral) or work and materials?

Holding

Held: (Fullagar J criticised the “substance of the contract” test) It is a sale of goods, so not enforceable. Subject matter of contract was sale and delivery of chattel

Aristoc Industries v Werham Builders (1965)

Facts

S was builder at Prince Alfred Hospital. S sub-contracted to Aristoc for lecture seats. Aristoc manufactured and delivered seats. Could not install them because theatre not ready. S assigned its contract to Werham. Aristoc wanted seats back; Werham refused

Holding

Held: Contract for work and materials. Property remained with Aristoc.

Collins Trading v Maher (1959)

Facts

Collins trading engaged to supply and install ‘Wonder- Heat’ heater. Maher argued contract for sale of goods (not in writing so not enforceable). Collins argued contract for work & materials (enforceable contract).

Holding

Held: Contract for supply of goods, Installation was merely ancillary, Contract not enforceable.

Brookes Robinson v Rothfield [1951]

Facts

Rothfield (D) asked BR (P) to construct cocktail cabinet. P was to install it in D’s home. P assembled the cabinet. D refused to allow installation or pay

Holding

Held: Not a contract for sale of goods because it required manufacture and installation property did not pass until installation.

Hewett v Court (1983)

Facts

Hewett family contracted with Ogilby for construction of transportable house. Cost $34,116 paid up to $20,469. Ogilby part finished house, had money troubles, and handed over unfinished house. Ogilby went into liquidation. Can the liquidator recover the unfinished house? Does the Hewett family have an equitable lien? Contract for work and materials? Contract for sale of goods?

Holding

Held: “The distinction between a contract for the sale of goods and a contract for the provision of work and materials is frequently a fine one and the tests for distinguishing the one from the other are unsatisfactory and imprecise.” Court found: Contract for work but equitable lien available nevertheless.