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#15498 - Rights And Remedies - International Commercial Law

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RIGHTS AND REMEDIES OF THE SELLER
UK PROVISIONS
Rights and remedies of seller against goods

  • Unpaid seller = when whole of price not paid or when payment conditional + condition not fulfilled (SGA 38(1))

  • Rights of unpaid seller (1) right of lien; (2) right of stopping goods in transit; (3) right of re-sale (SGA 39(1))

  • ‘Unpaid Seller’ (SGA S 38)

  • Where whole of price has not been paid

  • When BoE or other conditional instrument received and condition not fulfilled, instrument dishonoured

  1. Seller’s lien on the goods:

  • SGA 41 unpaid S in possession of goods entitled to retain possession:

  1. Until paid;

  2. Where any credit period has expired or

  3. Where B has become insolvent

S43 right of lien lost if goods paid for, consigned to carrier without ROT or where B has possession of goods or by waiver of S

  1. Stoppage in transit:

  • SGA 44 & 46 S may stop goods in transit where B has become insolvent, and retain them until paid

  • SGA 46(1): stopping could either be:

  1. Taking actual possession of goods; or

  2. By giving notice of S’s claim to carrier.

  • Limited only used where B becomes insolvent; can be lost if B intercepts goods before S exercises right

  1. Re-sale by seller:

  • SGA 48(3) unpaid S can re-sell goods where:

  1. Goods are perishable

  2. S gives notice to B of intention to do so

  • Limit: S must give B notice + wait to see if B tenders price within a reasonable time

  • Unpaid S who re-sells goods passes good title (must be in possession – have lien/right to stoppage in transit)

  • Original contract rescinded; B obligations to pay discharged; however S can sue B for damages if suffers loss
Personal rights of unpaid seller

  1. Action for the price (SGA 49):

  • S can sue B for price if B has property in goods but has not paid or if price due on ‘a day certain’ (SGA 49)

  1. SGA 49(1) S can bring action only if ownership has passed (check ROT clause) + B fails / refuses to pay

  2. SGA 49(2) S has limited right to bring action for price, irrespective of whether ownership has passed, where price is payable on ‘a day certain’ and B refuses to pay

  • Thus S does not necessarily have right, depends on ownership of goods in question

  1. Non-acceptance of goods (assessment of damages SGA 50)):

  • Where B has wrongfully refused to accept or pay for goods, S can sue B for damages (SGA 50).

  • Section 50(2) mirrors first limb of Hadley v Baxendale

  • SGA 50(3) lays down basis for assessment: difference btw contract price and market / current price at time when goods ought to have been accepted or (if not fixed) at time of refusal to accept

  • Where no available market, measure of damages is contract value of goods plus direct expense caused to S
Seller who is not in possession of goods (SGA 17 & 19)

  • SGA 17 and 19 right to reserve title to goods

  • Can be done in contract by inserting ROT clause

  • Allows S to recover goods if B fails to pay or becomes insolvent
INTERNATIONAL PROVISIONS

  • CISG: If B does not pay on time, S may allocate period for payment, then void contract + dispose of goods

  • PICC / PECL: either party may withhold performance, if simultaneous; if not, can terminate (7.1.3 / 9:201)

  • UCC: S may withhold delivery, stop delivery, reclaim goods, resell goods or recover damages (2:703)
STRUCTURE OF MODEL ANSWER – EXEMPLAR 2

  1. Incorporation of the terms

  2. Breach of contract

  3. Primary remedy of the Seller and whether worth pursuing?

  4. Availability of alternative remedy under retention of title clause

  5. For each item:

  • Who owns item and why?

  • Are Seller’s rights under ROT clause enforceable?

  • How would item be identified and can it be taken back?

  • If cannot be recovered, could money be recovered instead?

  1. Practical difficulties

  2. Could Buyer counterclaim?
RIGHTS AND REMEDIES OF THE BUYER
UK PROVISIONS

  • B has right to have rble opportunity, on request, to inspect goods (SGA 34); loses right if tells S accepts goods, does sthg inconsistent with S’s ownership, retains goods beyond rble period of time (SGA 35)

  • As with S, breach of condition will always entitle B to reject goods, repudiate contract and/or sue for damages

  • B may also sue for damages for breach of warranty

  • Thus B has right to repudiate contract for:

  1. Non-delivery

  2. Late delivery, if time is of essence

  3. Delivery of wrong quantity (subject to SGA 30(2A)

  • Remedies for misrepresentation is rescission, even if innocent; barred by affirmation, lapse of time, inability to restore parties to original position or goods acquired by innocent TP

  • Under CRA, three-tier remedy structure

  1. Short-term right to reject (30 days)

  2. Right to repair or replacement

  3. Right to price reduction or final right to reject

  1. Claim for damages (SGA 53):

  • SGA 53 B can sue for damages of contract term, either express or implied

  • SGA 51 lays down principles for calculating damages for non-delivery of goods: difference between contract price and market / current price at time goods ought to have been delivered / refusal to deliver

  • Basically B’s loss is any increase in price of equivalent goods obtained from another source

  • Where B suffers conseq. loss, can claim ‘further damage’ (SGA 53(4)) and ‘special damages’ (SGA 54)

  1. Specific performance:

  • B’s right to apply for specific performance is regulated by SGA 52

  • Only for specific or ascertained goods (identified and agreed upon at time contract is made)

  • Applies whether or not property in goods has already passed to B

  • Court has discretion to order specific performance

  • Would not be ordered:

  1. In respect of goods which can be bought elsewhere by B

  2. Where damages provide an adequate remedy
INTERNATIONAL PROVISIONS

  • CISG: B remedies incl. specific performance; replacement / replacement; damages, avoidance (46-52)

  • PICC: similar (7.2.2-7.3.1)

  • UCC: similar (2-711)

  • PECL: specific performance, damages, termination (9)
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