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.
Table of Contents
1 Introduction
2 Discussion of problems of the law before 1995
Reasons leading to the reform of the Sale of Goods Act 1995
3 Statement of the law in introduced by the reform
4 Critical analysis of the scope of the s.20A
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
9 Bibliography
Research Objectives and Thematic Focus
This paper examines the effectiveness of the Sale of Goods (Amendment) Act 1995 in resolving the legal challenges surrounding the transfer of property in goods forming part of a bulk. The research evaluates whether the legislative reforms successfully address the vulnerabilities faced by pre-paying buyers, particularly in cases of seller insolvency, and critically analyzes the resulting inconsistencies within existing contract and property law frameworks.
- Legal position of pre-paying buyers of unascertained goods in bulk transactions.
- Critical evaluation of section 20A of the Sale of Goods Act 1995.
- Conflicts between the 1995 reform and established principles of property title transfer.
- Challenges associated with short delivery and overselling in bulk contracts.
- Ambiguities regarding the passing of risk in co-ownership arrangements.
Excerpt from the Book
6 Overselling – problematic relationship between the s. 20A and rules on passing of title
It is by no means clear what the consequences are if a seller sells more that the quantity of the goods in the bulk, e.g. the seller sells 50 ton to each buyer A and B out of a bulk which contains 100 t and then he sells 50 t out of the same bulk to buyer C. The original buyers A and B will initially acquire property in one half of the bulk each, but how affects their proprietary interest the later sale to buyer C? The Law Commission suggests that the buyer C simply joins earlier buyers A and B as rateable owner of the bulk, so that each would have 33,3 t entitlement in the bulk. The shortage in delivery would be dealt at the first came, first serve basis as discussed above. Professor Bridge criticizes such interpretation of the interplay of the s. 20A and rules on passing of title as “impressionist”, because it offends the basic principle of title transfer law that losses caused by rogue are not simply divided between the owner and the innocent third party.
Summary of Chapters
1 Introduction: This chapter introduces the legal dilemma regarding property rights in bulk goods prior to the 1995 reform and outlines the paper's critical perspective on the amendment.
2 Discussion of problems of the law before 1995: This section details the historical inconsistencies and the specific hardships faced by buyers due to strict ascertainment requirements, including the reasons for legislative intervention.
3 Statement of the law in introduced by the reform: This chapter outlines the objectives of the 1995 Act and the introduction of section 20A regarding tenancy in common.
4 Critical analysis of the scope of the s.20A: This chapter scrutinizes the narrow applicability of the reform and how it fails to address broader concerns regarding general stock and third-party rights.
5 Problematic situations of short delivery: This chapter analyzes the practical difficulties and potential injustices arising when the quantity of bulk goods fluctuates or falls short.
6 Overselling – problematic relationship between the s. 20A and rules on passing of title: This section explores the complex and conflicting outcomes when a seller disposes of more goods than are present in the bulk.
7 Unclear application of default rules on passing of risk on s. 20A: This chapter discusses the ambiguity regarding risk allocation in co-ownership scenarios and the necessity for clear contractual provisions.
8 Conclusions: This final chapter synthesizes the arguments, concluding that the 1995 reform is an incoherent, piecemeal amendment that fails to resolve fundamental issues in English commercial law.
9 Bibliography: Provides a comprehensive list of the academic sources, case law, and legislation cited throughout the analysis.
Keywords
Sale of Goods Act, Bulk Goods, Property Transfer, Section 20A, Seller Insolvency, Tenancy in Common, Pre-paying Buyer, Ascertainment, Short Delivery, Overselling, Passing of Risk, Commercial Law, Contract Law, Title Transfer, Commodity Trading
Frequently Asked Questions
What is the primary focus of this assignment?
The work focuses on the reforms introduced by the Sale of Goods (Amendment) Act 1995 regarding the passing of property in goods that form part of an identified bulk in the United Kingdom.
What are the central themes of the research?
The central themes include the legal protection of pre-paying buyers, the mechanism of tenancy in common, the impact of seller insolvency, and the interplay between statutory reforms and common law title transfer rules.
What is the core research question?
The paper asks whether the 1995 reform effectively solves the legal problems of the old law or if it introduces new inconsistencies and injustices into the commercial legal framework.
Which methodology is applied in the study?
The author applies a critical legal analysis, measuring the reform against its stated objectives and testing it against hypothetical scenarios and established case law.
What topics are covered in the main section of the paper?
The main sections cover the background of the 1995 reform, the scope of section 20A, challenges of short delivery and overselling, and the ambiguity regarding the passing of risk in bulk contracts.
Which keywords best characterize this work?
Key terms include Sale of Goods Act, Bulk Goods, Property Transfer, Section 20A, Tenancy in Common, and Seller Insolvency.
How does the author view the "first come, first serve" basis mentioned in the text?
The author argues that this approach creates injustice between buyers in similar positions, as it places the burden of shortfall and deterioration entirely on the last buyer.
Why does the author describe the reform as "impressionist"?
The author cites Professor Bridge, who uses this term to criticize the Law Commission's interpretation of how section 20A interacts with title transfer rules, arguing that it ignores fundamental legal principles.
Is the 1995 Act considered a successful legislative step by the author?
No, the author concludes that the reform is largely unsuccessful, serving as a piecemeal amendment driven by lobbying rather than a coherent revision of commercial law.
- 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
