#20300 - Lecture 5 Breach And Remedies In Non Consumer B2 B Contracts - Commercial Sales Law Lecture Notes

Lecture 5: Breach and Remedies in Non-consumer (B2B) Contracts

1. The Unpaid Seller: Definition and Breach

A seller is legally "unpaid" when the full price hasn't been paid/tendered, or a conditional payment (like a bill of exchange) has been dishonored.

• Note on Credit Cards: Payment by credit card is usually consideredabsolute.The seller cannot claim to be "unpaid" just because the credit card company fails to pay them.

A. Seller’s Personal Remedies (Against the Buyer)

These are debt or damage claims pursued directly against the buyer.

• Action for the Price (s 49):

  • This is a debt claim, meaning rules on mitigation or remoteness don't apply.

  • Generally requires property (ownership) to have passed to the buyer.

  • Exception: If the contract specifies a "day certain" for payment, the seller can sue for the price even if property hasn't passed.

• Damages for Non-acceptance (s 50):

  • Used when property hasnotpassed, or the seller chooses damages over the price.

  • Measure: The difference between the contract price and the market price at the time of the breach.

  • Available Market: If there is no market (e.g., oversupply), the seller can claim for actual lost profits under the rules ofHadley v Baxendale.

B. Seller’s Real Remedies (Against the Goods)

These allow the seller to use the goods as security if the buyer is insolvent or refuses to pay.

• Lien (s 41): The right to retain possession of goods until paid.This is lost once the buyer lawfully obtains possession or the seller waives the right.

• Stoppage in Transit (s 44): If the buyer becomesinsolvent, the seller can stop goods already with a carrier and resume possession.

• Right of Resale (s 48): Legal if the goods areperishable, the seller gives notice and the buyer still doesn't pay, or the contract expressly allows it.

2. Buyer’s Remedies

When a seller breaches, the buyer has three main avenues: Rejection, Damages, or Specific Performance.

A. Rejection (Terminating the Contract)

• Conditions: A buyer can reject goods for a breach of a condition (including implied terms in ss 13-15).

• Loss of Right to Reject:

  • Acceptance: If the buyer "accepts" the goods (e.g., keeps them for a reasonable time or acts as the owner), they can only claim damages.

  • Slight Breaches (s 15A): In B2B contracts, if the breach is so slight that rejection is unreasonable, it is treated as a breach of warranty only.

• Note: Repairing goods doesnotautomatically mean the buyer has accepted them.

...