In this essay I will analyse the appropriateness of the reform of the law on the passing of property of a specific quantity of goods forming part of a bulk by measuring it against its objectives, examining how far it solves the problems of the old law and considering the inconsistencies which introduces into the Sales law.
Firstly, the problems of the law before the reform and the reasons for the reform will be discussed. Secondly, the law introduced by the reform will be described; and thirdly, the solution offered by the reform and its interaction with the rules on passing of property and passing of risk will be critically analysed. The author will argue that while the reform seemingly successfully responds to all problems of the old law, after scrutiny it is clear that the reform suffers from inconsistency and immanent injustice and fails to provide the intended protection to the buyer.
Until September 1995 where a buyer bought a specified quantity forming part of an identified bulk, i.e. 250 tons of wheat from a named ship carrying a cargo of 500 tons, he could not acquire property in the goods until the goods were ascertained. This was result of a mandatory rule in s. 16 which provided that “where there is a contract for the sale of unascertained goods no property in the goods is transferred to the buyer unless and until the goods are ascertained”. The most serious consequence of the mandatory rule in s. 16 was that the buyer did not acquire property in the goods even though he had paid for it and received a document purporting to be a document of title. If the seller became insolvent before the goods were ascertained, both the paid price and the goods in the bulk passed to the office-holder in insolvency for the benefit of secured creditors and the buyer happens to be merely an unsecured creditor with no proprietary claim to his goods. As follows the seller´s secured creditors might receive an undeserved windfall, because both the goods and the paid price might fall into the assets of the insolvent seller in liquidation. The Sale of Goods (Amendment) Act 1995 attempted to solve this undesirable situation by introducing an exception to s.16. In s. 20A (1) it was introduced that unless otherwise agreed the prepaying buyer purchasing specified quantity of an identified bulk acquires an undivided share in the bulk ad becomes a tenant in common of the bulk.
Inhaltsverzeichnis (Table of Contents)
- 1 Introduction
- 2 Discussion of problems of the law before 1995
- 3 Statement of the law in introduced by the reform
- 4 Reasons leading to the reform of the Sale of Goods Act 1995
- 5 Problematic situations of short delivery
- 6 Overselling – problematic relationship between the s. 20A and rules on passing of title
- 7 Unclear application of default rules on passing of risk on s. 20A
- 8 Conclusions
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This essay analyzes the 1995 reform of the Sale of Goods Act concerning the passing of property for goods forming part of a bulk. It aims to assess the reform's effectiveness in addressing issues of the previous law and to identify any inconsistencies or injustices introduced. The analysis focuses on the interaction between the reform and existing rules on property and risk transfer.
- Problems with the Sale of Goods Act before 1995
- The 1995 reform and its intended solutions
- Analysis of the reform's effectiveness and its implications
- Inconsistencies and potential injustices within the reformed law
- The impact of the reform on commodity traders and the shipping industry
Zusammenfassung der Kapitel (Chapter Summaries)
1 Introduction: This introductory chapter sets the stage, explaining the pre-1995 legal situation where a buyer of a specific quantity from an identified bulk (e.g., 250 tons of wheat from a 500-ton cargo) couldn't acquire property until the goods were ascertained. This stemmed from a mandatory rule in section 16 of the Sale of Goods Act 1979. The key consequence was that if the seller became insolvent before ascertainment, the buyer lost both the paid price and the goods, becoming merely an unsecured creditor. The 1995 amendment aimed to remedy this by introducing section 20A, which grants prepaying buyers an undivided share in the bulk, making them tenants in common. The essay will analyze the reform's effectiveness and inconsistencies.
2 Discussion of problems of the law before 1995: This chapter details the shortcomings of the pre-1995 law. It highlights how economically similar situations led to different legal outcomes. For instance, buying an undivided share (e.g., half a cargo) immediately created a tenancy in common, giving the buyer proprietary rights, unlike buying a specific quantity (e.g., 250 tons). It also notes that ascertaining the goods before insolvency was crucial for buyers to claim proprietary rights, making the buyer's success dependent on the seller's actions. The chapter exposes the legal inconsistencies and unfairness inherent in the pre-reform system.
4 Reasons leading to the reform of the Sale of Goods Act 1995: This section explores the factors prompting the 1995 reform. The shift in the shipping industry toward larger vessels and increased speculative trading, combined with a rise in cases where buyers lost property rights due to seller insolvency, exposed the flaws in the existing legislation. Publicity surrounding cases like *Re London Wine* and *The Aliakmon* highlighted the need for change. The chapter discusses concerns that UK traders would switch to alternative legal systems if the issue remained unaddressed, potentially harming Britain's legal and commercial standing. The involvement of the Law Commission in investigating the problem and proposing a solution forms a significant part of the discussion.
Schlüsselwörter (Keywords)
Sale of Goods Act 1979, Sale of Goods (Amendment) Act 1995, section 16, section 20A, passing of property, ascertained goods, unascertained goods, bulk, tenancy in common, insolvency, commodity trading, shipping, proprietary interest, unsecured creditor, Law Commission, reform.
Frequently Asked Questions: Analysis of the 1995 Reform of the Sale of Goods Act
What is the main topic of this essay?
This essay analyzes the 1995 reform of the Sale of Goods Act, specifically focusing on how it changed the rules regarding the passing of property for goods that are part of a larger bulk. It examines the effectiveness of the reform in solving pre-existing problems, identifies inconsistencies, and explores its impact on various stakeholders, such as commodity traders and the shipping industry.
What were the problems with the Sale of Goods Act before 1995?
Before the 1995 reform, the law concerning the passing of property for goods within a bulk was complex and often led to unfair outcomes. Buyers of a specific quantity from an identified bulk (e.g., 250 tons of wheat from a 500-ton shipment) did not acquire property until the goods were ascertained. If the seller became insolvent before this ascertainment, the buyer lost their money and the goods, becoming an unsecured creditor. The law also created inconsistencies, treating purchases of an undivided share differently than purchases of a specific quantity from a bulk.
What changes did the 1995 reform introduce?
The 1995 reform introduced Section 20A to the Sale of Goods Act. This section grants prepaying buyers an undivided share in the bulk, making them tenants in common. This means buyers gain proprietary rights even before the goods are ascertained, protecting them from losses in case of seller insolvency.
What were the reasons behind the 1995 reform?
Several factors drove the reform. The shipping industry's shift towards larger vessels and increased speculative trading led to more cases where buyers lost property rights due to seller insolvency. High-profile cases like *Re London Wine* and *The Aliakmon* highlighted the flaws in the existing legislation. Concerns that UK traders might move to other legal systems if the issue remained unresolved also contributed to the reform. The Law Commission played a crucial role in investigating the problem and proposing a solution.
What are the key themes explored in the essay?
The essay explores the problems with the pre-1995 law, the intended solutions of the 1995 reform, its effectiveness and implications, inconsistencies and potential injustices within the reformed law, and the reform's impact on commodity traders and the shipping industry. The interaction between the reform and existing rules on property and risk transfer is a central focus.
What are the key chapters and their summaries?
The essay includes chapters on the introduction, outlining the pre-1995 legal situation and the aims of the reform; a discussion of the problems before 1995; an explanation of the reform itself and its rationale; and concluding remarks. Each chapter provides a detailed analysis of specific aspects of the law.
What are the keywords associated with this analysis?
Key terms include: Sale of Goods Act 1979, Sale of Goods (Amendment) Act 1995, section 16, section 20A, passing of property, ascertained goods, unascertained goods, bulk, tenancy in common, insolvency, commodity trading, shipping, proprietary interest, unsecured creditor, Law Commission, reform.
- Quote paper
- Lucie Novotna Krtousova (Author), 2012, United Kingdom reforms of the law on the passing of property of a specific quantity of goods forming part of a bulk, Munich, GRIN Verlag, https://www.grin.com/document/358290
