Remedies of Buyer

1. Rejection

Acceptance of goods?

Section 35 (1)
a) B intimates to S that he has accepted the goods (Express Acceptance)
b) B does an act which is inconsistent with the ownership of S (Implied Acceptance). This is
based on the conduct of the buyer through which an inference is made.
Case: McDougall v Aeromarine of Emsworth Ltd (1958) – Lord Diplock
Facts: Aeromarine contracted with McDougall for the building of a yacht. They wanted to use
the yacht in 1957 with the price being paid in 5 installments. A clause in the contract stated that
when the buyer will pay the first installment, property will pass. According to S.17, property
passed to the buyer. The yacht built had many defects which made it of unsatisfactory quality
(breach of implied term). Aeromarine agreed to negotiate and fix the yacht. However, McDougall
did not accept this idea. Did McDougall have the right to reject the goods?
Lord Diplock: By the virtue of clause 8, the buyer was entitled to reject the goods pursuant to
the passing of property. So even though the property has passed by virtue of clause 8, the
buyer is entitled to reject them. Therefore, ownership went back to the Seller retrospectively.
Case: Head v Tattersall (1871)

Section 34: Right of buyer to examine goods

The seller should give a reasonable opportunity to the buyer to examine the goods and ensure
they conform with the contract.

Section 35 (2): Reasonable time to examine the goods

A substantial use of goods amounts to acceptance in these situations. When examining, the
buyer must see whether the goods conform to the contract, or whether the bulk received is
similar to the sample. A pre-requisite of this is that the buyer must not have examined the goods
before.
* Buyer will lose the right of rejection even if he partly accepts the goods.
Section 35(4): Lapse of Reasonable Time + No intimation to S by B =
Acceptance of Goods
Case: Truk v Tokmakidis (2000)
Judge Jack QC
Decision: Reasonable time is a question of fact which varies from case to case. The judgment
derived 3 points:
1) Reasonable time will balance the interests of B and S.
Case: Clegg v Olle Andersson (2003)
The reasonable time period to examine a yacht was set at 8 Months because it is classified as a
“complex machine”.

2) Reasonable time may not be less than what is required to examine the goods and may be
longer to be affected by negotiations of parties. The reasonable time will be decided by looking
at the nature of the goods.
Case: Jonas v Gallaghar (2004)

3) There can only be one reasonable time period (No different times for different defects in the
goods).

Key Case: Whitecap Leisure v John H Rundle Ltd (2002) – Lord Justice Ward
Facts: The buyer receives equipment which he rejects because it is ‘defective’. Therefore, he
refuses to pay the Seller. After the goods were delivered, the buyer buys alternative equipment
and continues to use some of the previous seller’s equipment. The seller negotiates a new
agreement. However, the equipment breaks down again. The buyer starts a claim for damages
and the seller argues that on the basis of S.35(4), the reasonable time of accepting the goods
has lapsed and the buyer has ‘accepted’ the goods therefore he demands payment for the
equipment.
The Court of first instance decides that the buyer took too long to object as he did not intimate
his rejection within a reasonable time. The Court of Appeal gave the seller two choices. First, he
could dispute B’s right to reject and claim the payment. The second choice was to accept the
right of rejection, recover the equipment and claim the damages for non-acceptance. The seller
went with the latter and recovered 80% of the outstanding balance and added a term that if a
defect was found, rejection should be made within 14 days.

Section 35(6) – Buyer will not have accepted the goods if:
a) B asks for repair
b) Goods are delivered to another under a sub-sale
Case: J & H Ritchie Ltd v Lloyd Ltd (2007) UKHC – Lord Mance
Facts: Ritchies order a drill and power harrow. 2 days after delivery, they had to stop using it
because the equipment developed serious vibrations. They asked the seller to take it back for
repair. The harrow was missing the 2 bearing balls which made the machine unsatisfactory to
use. The seller refuses to tell Ritchie what the nature of the fault was, despite repeated
questioning. Ritchie rejects the goods and asks for a refund. Lord Mance stated that the repair
contract is separate from acceptance of the goods. Because of this, implied terms of S.14 have
been breached which makes the contract voidable. The rationale behind the decision was that
as per Section 36, the buyer is not bound to return the goods after rejecting them and it is
sufficient that he intimates to the seller that he has not accepted them.
“If the buyer agrees to repair of the goods, and the repair is properly executed to
conform goods to the contract, the buyer will not have the right of rejection.”
Article: V Mak’s “The Seller’s Right to Cure Defective Performance” (2007)

Case: Jones v Gallagher

Decision: The lapse of reasonable time will also be taken in account to see if the repair has
been done.

Section 35(A) – Right of partial rejection

If one part of the bulk is not conforming to the contract because of the seller’s fault, the buyer
can accept the remaining part and reject the non-conforming part.
If the breach is done by the seller, and the buyer accepts the goods unaffected by the breach,
acceptance will not equate to loss of right to rejection of goods. [Subject to S.11(4)]. This will
only apply to contracts which cannot be severed/divided. If the goods are one unit and not part
of a bulk, and the goods are damaged due to the seller’s fault, the breach will be of a warranty,
and not a condition.
Case: Gregg & Co. (Knottingly) v Emhart Glass Ltd (2005)
Principle: If under S.35(A) the buyer chooses to accept defective goods, the seller’s failure to
remedy the goods will still allow the buyer to repudiate the contract and seek damages.
 Summary

1) When B has the right to reject goods?

(i) Breach of Condition,
(ii) Innominate Term, or
(iii) When time is of the essence and delay by Seller will amount to repudiation
2) When is the right of rejection lost?
(i) Acceptance,
(ii) Breach is so slight as to make rejection unreasonable as per S.15(A)(1)(b)
(iii) If the right of rejection is constricted by a contract e.g. in UCTA (Exclusion/Limitation)

2. Damages

Section 51(1) - Failure to Deliver

This section relates to cases where the seller wrongfully neglects or rejects to deliver the goods
to the buyer, the buyer can bring a claim for damages.

Section 51(2) - Measure of Damages

Seller’s breach of contract will result in the measure of damages. The result/loss should be
direct and natural. These are decided on the basis of remoteness i.e. damages should not be
too remote from the breach of the contract.
Case: Hadley v Baxendale (1854)
Facts and Decision: Hadley owned a mill but its crankshaft was broken. He contracted with the
defendant for the transport of the crankshaft and its repair. The error by Baxendale caused it to
be delivered a week late. The claimant brings a claim for commercial negligence and demands
damages for loss of profits. Baxendale argues that he was unaware that the delay in the
delivery caused the closure of the mill. The question was whether damages should be awarded
based on whether they fulfill the test of remoteness. The court decided that the seller will not be
liable because the damages were too remote as they were not reasonably foreseeable.
Section 51(3) - Available Market
Damages will be decided on whether there is an available market for the goods where they
could be sold. If there is a market, the measure of damages will be ascertained by the difference
between the cost of goods as per the contract and cost of replacement goods in an available
market. This difference equates to the amount of loss taking place, resulting in the measure of
damages. If an available market does not exist, the full cost of the goods can be recovered.
Case: Williams v Reynolds (1865) – Common Law judgement by Blackburn J
Case: Bunge SA v Nidera BV (2015) – UKSC Judgement by Lord Toulson
Case: Vitol SA v Beta Renewable Group (2017)

Section 52 – Specific Performance

Breach Of Contract
Specific or Ascertained Goods
Case: Re Wait
Decision: Property X – Specific Performance X

Case: Thames Valley Power Ltd v Total Gas & Power (2005) – Clarke J
Decision: Specific Performance can also be invoked in a contract for unascertained goods.
Case: Charles v Oppenheim (1950)
Decision: A party can waive off their right to remedy a breach.

Section 54
Special damages can be claimed by the Buyer for loss arising from circumstances that S is
aware about.
Case: Koufous v Czarnikow (Heron II) (1969) is the test for remoteness of damages.
Case: Transfield Shipping v Mercator Shipping (2008)
Decision: Resp Accepted = Damages will be recovered.
 Remedies for Sellers
Action for Price – Section 49
(1) Where the buyer neglects or refuses to pay the price for goods under a contract of sale, the
seller can bring an action for the price of the goods.
Case: Colley v Overseas Exporters (1921)
Facts and Decision: The seller agrees to sell a machine to the buyer on the condition that the
property will only pass when the machine has been unloaded from the dock. The buyer fails to
do so and refuses to pay the seller. The seller brings an action for the price. The remedy was
not allowed since the property did not pass. This is a very narrow approach.
Case: PST Energy v OW Bunker Matla (2016)
Facts and Decision: As per S.49, an action of price is not an exhaustive list for the seller’s right
to demand the price. If there are any other circumstances where price can be demanded, an
action for price can be brought.
(2) Where the money is to be paid on a certain date, and the buyer fails to pay, an action for
price can be invoked even if property has not been passed.
Case: Otis Vehicle Rentals Ltd v Cicely Commercials Ltd (2002)
Decision: The seller cannot bring an action for price if, on the date of payment, he does not
have possession for goods.

Action for damages for non-acceptance – Section 50

Where the buyer wrongfully neglects or refuses to pay for the goods, he can bring a claim for
damages resulting from the breach. This is similar to the damages for buyers.
Section 50(3) describes the measure of damages.
Case: Charter v Sullivan (1957) – Jenkins LJ
 Unpaid Seller Remedies – Section 39

(1)(a) – Lien
(1)(b) – Stopping goods in transit if B is insolvent
(1)(c) - Resale

(a) Unpaid Seller’s Lein

It essentially states that the seller has a possessory and proprietary interest in the goods which
means he can retain the goods until the price is paid in full. This even applies to sale of specific
goods where property has already passed when the contract was made between the parties.
- Section 41 (1) – When can the seller retain possession of the goods
(a) The goods are sold but terms of the credit payment (date, time) are not decided.
(b) Where the terms ARE decided but the credit period passes.
(c) Where the buyer becomes insolvent and is unable to pay the debt.
Delivery in Installments S.42) – In these cases, the seller can still claim his lien.
Case: Re Edwards ex parte Chambers (1873)
Case: Valpy v Gibson (1847)

Section 43(1) – Termination of Lien

(a) When the seller gives goods to a courier or bailee to deliver them to the buyer.
(b) When either the buyer or his agent obtains lawful possession of the goods
(c) If the contracts waives a lien or right of retention clause.
(b) Stoppage in Transit (S.44-46)
- The buyer must be insolvent
- The goods must be in transit i.e. not delivered yet.
- The seller must be unpaid
If all 3 conditions are fulfilled, the seller can choose to stop the goods in transit and retain
possession of them until payment is made.

Stoppage in Transit is lost:

- Section 45 (2) – Where the buyer intercepts the goods before they reach their appointed
destination as seen in Reddall v Union Castle (1914)
- Section 45 (3) – When the courier tells the buyer that the goods have arrived at the
destination and they are awaiting delivery.
- Section 45 (6) – Where the courier wrongfully refuses to deliver the goods
- Section 47 (2) – Where the title is transferred to the buyer, the right is lost.

Transit doesn’t end

Section 45 (7) – Where the goods are partly delivered to the buyer, the remainder can be
stopped in transit.
Section 45 (4) – Where the buyer rejects the goods, the courier is still in possession of the
goods, and the seller refuses to take the goods back.
(c) Recission and Re-Sale (S.48)
When a contract is nullified / cancelled / void and not legally binding, recission is available. This brings the
parties to their pre-contractual position.

Section 48 (1)
Just because an unpaid seller invokes any of the remedies available to him (Lien, Stoppage, Retention),
does not mean that the contract is rescinded.

Right to re-selling arises in

Section 48 (2)
Where the seller re-sells the goods to another, the first buyer cannot bring a claim for recission as the new
buyer will have a better title to the goods.

Section 48 (3)
Where the goods are perishable OR where the seller tells the buyer that he is going to re-sell the goods,
the buyer has to, within a reasonable time, inform the seller whether he will buy the goods or not. The
seller can also demand damages from the buyer for any loss he faced due to the buyer’s breach.

Section 48 (4)
Where the seller expressly reserves the right to re-sale in case the buyer defaults, the seller will have the
right if the buyer ends up defaulting. The original contract with the buyer is then rescinded but it does not
affect any claim for damages by the seller.

Case: RV Ward Ltd. v Bignall (1967)