English buyers, Harry and Garry, had under contracts of sale received a quantity of sarees which they found defective and in respect of which they had not yet accepted the relevant bills of exchange, by reference to which, it appeared, the Indian sellers, the Jariwallas, had however already succeeded in raising some monies in India. Harry and Garry agreed to accept the bills, so acquiring property in the sarees, while the Jariwallas agreed either to arrange the cancellation of the bills or to take back and pay for the sarees. Under this agreement, 2,494 sarees were then selected as sarees which the Jariwallas would, as they did, take back physically, and it was agreed that the Jariwallas would pay pounds 46,763.45 for such sarees, with property being retained by Harry and Garry until this full amount was paid. Through a Mr Shah, the Jariwallas sold some 411 of these sarees, evidently with the consent of Harry and Garry despite the reservation of title. Harry and Garry sued for the full pounds 46,763.45 agreed to be paid.
In the court below, Judge Harris had seen the contract as being one of sale, and on that basis held that, since the circumstances did not fall within section 49(2), a claim for the price was precluded.
Held: Harry and Garry’s appeal was allowed. Kerr LJ noted that section 49(1) was in terms inapplicable, because of the reservation of title, but the judge’s approach: ”It would be ironical if that were the correct analysis. One would be driven to the conclusion that although these goods had been delivered and had been accepted, the only remedy open to the plaintiffs, if indeed they were sellers of these goods, would apparently have been a claim for damages for non-acceptance under section 50, there being no other provision of the Act which would have given the plaintiffs any remedy. With all due respect to the judge, no doubt influenced as he was by the complexity of this case and the arguments which were addressed to him, I cannot agree with that analysis for two reasons. First, in my view this was not a contract for the sale of goods within the terms of the 1979 Act. It was not, to quote section 2(1) of the Act, ‘a contract by which the seller transfers or agrees to transfer the property in goods to the buyer for a money consideration, called the price’. Like many other contracts in complex situations, this was a sui generis transaction. In effect, what the Jariwallas agreed was that if the bills of exchange were accepted, which was their great concern, they would either have them cancelled or they would take the goods back and pay for them.
When it then came to the specific agreement about the 2,494 selected sarees, I think the nature of the agreement was that in consideration of the plaintiffs’ allowing them to take that consignment away and seeking to dispose of it as agents for the plaintiffs, who remained the owners of it, they agreed again either to perform the first part of the option, to have the bills of exchange cancelled at any rate to the extent of the value of those selected goods, or to pay the sum of pounds 46,763.45p. That was the nature of the agreement. Taking it on its own or taking it, as I think one should, as part of the agreement made on 23 December, I do not think it was a contract for the sale of goods to which the Act applied.’
Judges:
Kerr LJ
Citations:
[1988] WL 1608652
Jurisdiction:
England and Wales
Cited by:
Cited – PST Energy 7 Shipping Llc and Another v OW Bunker Malta Ltd and Another SC 11-May-2016
Parties had entered into a bunker supply contract which contained a retention of title clause in favour of the supplier. It purported to allow the buyer to use the goods before title came to be passed.
Held: The owner’s appeal failed. It did . .
Lists of cited by and citing cases may be incomplete.
Contract
Updated: 18 May 2022; Ref: scu.618129