Examiners’ reports 2016

Examiners’ reports 2016

LA3017 Commercial law – Zone B

Introduction
This document sets out the Chief Examiner’s report for the examination paper in
Commercial law Zone B. It begins with general remarks pertaining to the
examination scripts as a whole before considering each examination question in
turn.
Many candidates answered the questions well. At times, however, some candidates
struggled in the attempt to answer the problem set. Three common difficulties were
exhibited. One was a very fundamental one: an inability to recognise that certain
areas of law were involved in resolving the hypothetical problem. Candidates might,
for example, fail to notice that when asked to advise (in Q5, regarding ‘Portia’) that
the facts given raised issues pertaining to agency and not to the sale of goods. A
second difficulty was presented by those candidates who did not carefully consider
the facts given in a problem question. The resulting legal reasoning was often not
directed at the given issues. In some instances, a general discussion of a particular
area of law was set out, in absence of any attempt to apply this law towards the
resolution of the problem given. A third, somewhat less fundamental difficulty, was
an inability to identify the particular and specific issues involved within a broad area
of law which the candidate had recognised as relevant. At times, this problem
seemed to arise because candidates appeared to be covering legal issues which
had formed examination questions set in previous years. Thus, for example, some
candidates discussed the passing of property in the sales of goods in Q4 (regarding
‘Marcus Ltd’) without any real attempt to consider the real and personal remedies of
a seller under the Sale of Goods Act 1979.
Some candidates, in other words, appeared to be reproducing answers to past
examination questions. It must be emphasised that a purpose of the Examiners’
report is to give an indication of a method by which particular questions can be
answered and some indication of the law necessary to answer these questions. The
report is not intended to form a base of specific knowledge which is to be recited as
the answers to future examination questions.
It is extremely important that candidates apply the law to the issues presented in a
problem. Candidates should consider the principles developed within the relevant
cases and the reasons behind these particular principles. These must then be
applied to the problem to resolve it. For many candidates, however, their answer to
a problem question resembled a ‘shopping list’ of cases dutifully recorded in the
examination booklet. The reason for this is probably two-fold: first, it is often hard for
intermediate candidates to discern the relevant from the irrelevant and caution
encourages a complete list of cases to ensure that none is omitted; secondly, it is
tempting to produce a lengthy answer in the hope that the examiner will be
impressed by the breadth of knowledge acquired by the candidate. A successful
answer identifies the issues and applies the relevant law to them. Such an answer

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displays not only knowledge but also understanding of the subject being examined.
The recitation and discussion of cases which are irrelevant to the question serve to
highlight a candidate’s uncertainty as to which issues are involved in the question.
In other instances, some answers appeared chaotic, as if the candidate had hurried
into an issue without full consideration of the question as a whole. Candidates who
prepare a careful plan of their answer before writing it in full will find that the time
spent in making such a plan is repaid by the clarity of the final answer. Among other
things, it allows candidates to see the interaction of issues before they have
committed themselves to one course or another. It should also prevent candidates
from omitting points they had intended to discuss.
Many candidates struggled to answer essay questions thoroughly. Their attempts
were often, and unfortunately, confined to the recitation of everything they knew
about a particular subject. In so doing, such candidates often presented a great
deal of material; this presentation was marred by an apparent inability to discern the
relevant from the irrelevant and a lack of analysis as to the underlying nature of the
question. In attempting to answer essay questions, candidates needed to consider
the exact nature of the question asked. At times, this can be very broad, allowing
candidates to draw upon particular areas covered in this course. The information
drawn up, needs to be employed as support for the arguments made in attempting
to answer the question. Candidates should resist the temptation to write everything
they know about a particular area of law and focus on what is relevant to answering
the question set. Candidates must consider whether or not they are addressing their
answer to the question as asked. A part of this answer will, necessarily, involve
legal analysis. In other instances, candidates were unable to answer the question
asked in an essay question. They chose, instead, to adapt the question to a topic
that they did know something about. Such an attempt is not, however, an answer to
the question asked. It also leaves the examiners with the impression that the
students are unable to answer four questions from the examination paper.
Finally, many candidates suffered from an inability to budget their time. In these
instances two or three good answers would be followed by a weak (and in some
cases non-existent) effort to answer the balance of the paper.
It goes without saying that it is difficult to succeed where all of a candidate’s efforts
are concentrated on two or three answers when the examination paper requires
four questions to be answered. A number of candidates did not appear to have
sufficient knowledge of commercial law to attempt four questions. Lastly, the
examiners in commercial law wish to emphasise the importance of writing the
answers clearly. It is difficult, and sometimes impossible, to assess the illegible.

Comments on specific questions

Question 1
Superior Computers Ltd manufactures desktop computers. They supply a
variety of national retailers with high specification computers. They also
supply ‘Achilles 2.0’, a computer operating system. In January, 2015, Bigg PC
Ltd, a national retailer, contract with Superior for a delivery of 30,000 ‘Trojan
1200’ computers. All the computers are to be delivered to Bigg’s warehouse.
Half of the computers are to be loaded with Achilles 2.0. The first shipment
(half pre-loaded with Achilles 2.0, half without operating systems) is to be
delivered in March; the second shipment of the remaining devices is to be
delivered in July. Superior also agrees to allow Bigg to have the right,

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between March and September, to sell to its customers a pincode which

allows Bigg customers to download Achilles 2.0 from the internet.
The contract between Superior and Bigg also contains the following terms:
‘It is a condition of this agreement that Superior undertakes to provide
‘Trojan 1200’ computers ready for retail distribution and that 15,000 of
these computers will have the Achilles 2.0 operating system pre-
installed…
Superior’s terms and conditions of business, as delivered to Bigg, shall
prevail. These terms and conditions of business are subject to change
without notice’.
Bigg receives its first shipment in March. The delivery to its warehouse is
accompanied by a shipment invoice which includes the following term on the
reverse:
‘No terms are implied as to the condition, fitness or operating quality
of Superior’s ‘Trojan 1200’ computers… Any loss arising from the use
or re-sale of any ‘Trojan 1200’ computer is limited to £10’.
A fault in the Achilles 2.0 operating system means that some of the
computers delivered to Bigg do not work properly. Similarly, some of Bigg’s
customers, who downloaded the Achilles 2.0 operating system using a
pincode have problems with their computers due to the fault in Achilles 2.0.
Bigg has been compelled to reimburse its customers for the losses arising
from this defect. In addition, 75 of the computers delivered in July were not
installed with Achilles 2.0 but an older version, Achilles 1.0. Bigg rejects the
entire shipment, informing Superior that this is within their rights. Bigg also
seeks to recover compensation for amounts that they have had to pay to
customers who had suffered as a result of the faulty Achilles 2.0 systems
sold to them by Bigg.
Advise Superior.
General remarks
The question requires candidates to isolate the relevant issues from the facts
provided in the problem. The question concerns issues arising within the context of
sales of goods. The most significant issues are whether or not the Sale of Goods
Act 1979 applies to the particular transaction (in the case of the downloading, it
probably does not) and, if it does apply, what terms are implied into the contract of
sale. Candidates need to consider whether or not these implied terms have been
breached and the extent to which Superior has exempted itself from liability for such
a breach. Finally, what rights does Bigg have in relation to each of the two
shipments?
Law cases, reports and other references the examiners would expect you to
use
The material covered in this question is set out in Chapter 5 of the subject guide to
commercial law. Legal sources which could be referred to in answering this
question include: L’Estrange v Graucob; Chapleton v Barry; Parker v South Eastern
Railway Company; Spurling v Bradshaw; Thornton v Shoe Lane Parking; Roscorla
v Thomas; the Sale of Goods Act 1979 (especially ss.2(1), 61(1) ‘goods’, ss.12–
15A, particularly s.14, and ss.34–36) and relevant interpretative cases (e.g. St
Albans City and District Council v International Computers Ltd; Britvic Soft Drinks
Ltd v Messer UK Ltd; Bramhill v Edwards); the Unfair Contract Terms Act 1977
(especially ss.1, 3, 6, 11 and Schedule 2) and the relevant interpretative cases (e.g.
St Albans City and District Council v International Computers Ltd); Decro-Wall
International SA v Practitioners in Marketing Ltd; Federal Commerce and

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Navigation v Molena Alpha; Schuler v Wickman Machine Tools; and Lombard North
Central Finance v Butterwort.
Common errors
Three particularly common errors exhibited in attempts to answer this question. The
first was to apply, in whole or in part, the provisions of the Consumer Rights Act
2015. The second was to apply the Unfair Contract Terms Act 1977 in absence of
the modifications to the 1977 Act brought about by the Consumer Rights Act 2015.
The third was an inability to identify all the relevant issues presented by this
problem. So, for example, some candidates considered the nature of the terms
implied by the Sale of Goods Act 1979 without considering those terms which were
expressly incorporated into the contract by the parties.
A good answer to this question would…
begin by establishing the terms of the contract between Superior and Bigg. What
are the express terms of the contract? In other words, how are the terms
incorporated into this contract? Little information is provided as to how Bigg and
Superior have entered into this contract although it is likely (given the commercial
context in which it arises) that the parties have signed a written contract. The first
two terms are probably incorporated in this fashion. A good answer would also note
that the first shipment includes another term on the reverse of the invoice which
seeks to limit Superior’s liability. This raises questions as to whether or not this term
is incorporated by notice or, as appears more likely, it cannot now be added to the
contract which has already been formed. The counter-argument (which is likely to
prevail) is that this is not a later attempt to add terms but form a part of the original
contract between the parties by reason of the second of the terms quoted from the
original contract. Having established the express terms of the contract, candidates
needed to consider what terms are implied into the contract by reason of the Sale of
Goods Act 1979. Importantly, it seems unlikely that the programmes downloaded
from the internet using a pincode are goods within the definition of Sale of Goods
Act 1979.
Having established the express and implied terms of the contract, the next major
issue arises as to how these terms are regulated. As this is a business to business
contract, such regulation as occurs does so by reason of the Sale of Goods Act
1979 (s.55(1)) and the Unfair Contract Terms Act 1977. Of particular concern is
whether or not Bigg has contracted on its standard terms of business because, if it
has, s.3 of the Unfair Contract Terms Act 1977 acts to prevent Bigg from excluding
or restricting its liability when in breach of contract except to the extent that the
contractual term satisfies the requirement of reasonableness under the Act.
The final set of issues arises in relation to Bigg’s rights upon a breach of the
contract. How each of these is resolved should be linked to the determination of the
efficacy of the exclusion clauses contained within the contract of sale. In relation to
the first shipment, this pertains to the right to claim damages and an indication of
what these damages cover. In relation to the second shipment, the right to reject
this shipment involves two possible arguments. The first is that the right to reject
goods is contained within ss.15A and 34–36 of the Sale of Goods Act. Unless a
contrary intention appears in the contract, it would seem that the breach of the
terms implied by s.14 does not give rise to the right to terminate the contract. The
second possible argument is the counter-argument that the contract establishes
that the term breached is a condition – an argument which leads to a consideration
of the difficulties of employing the term ‘condition’ within a contract. A good answer
would also consider the dangers of over-reacting in such a situation and exercising
a right of termination which did not actually exist.

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Poor answers to this question…

failed to identify the relevant issues presented on these facts. In addition, some
candidates focused narrowly on one particular issue (e.g. the statutory regulation of
exclusion causes) without resolving any of the other issues presented. Finally,
some candidates applied law to the issues presented where this law could not apply
on the facts given, such as an application of the Consumer Rights Act 2015.
Conversely, some poor answers applied the provisions of the Unfair Contract Terms
Act 1977 as they were before amendment in October 2015 by the Consumer Rights
Act 2015. All of these matters indicated a lack of understanding on the part of the
particular candidate.
Student extract
Superior would want to deal with every issue systematically, so we will be
covering every issue Superior is facing.
This begins with the fact that the first most glaring issue is that there was a
fault in the Achilles 2.0 operating system. This caused some of the computers
delivered to superior to not function properly not only that, the Achlles [sic]
2.0 operating system resold to other customers also caused trouble. Superior
would first want to claim the lsos sustained by them in the form of damages
for breach of contract.
[A brief discussion which outlined some issues pertaining to ss.12 and 14 of
the Sale of Goods Act 1979 and exclusion clauses then followed. The
candidate then concluded with the following statements.]
The fact that bigg allowed Superior to sell to its customers the ability to
download Achilles 2.0 from the internet with a specific pincode, does the
pincode make the goods ascertainable? These goods being ascertainable,
here allowing possession to move based on the intention of the parties.
There is a breach of contract by Superior, but are Superior’s Liabilitiy only
limited to 10 s as decided in the exclusion clause?
Comments on extract
This attempt to answer the question failed. A major reason behind the failure was
that the candidate failed to identify all of the issues presented upon these facts.
While this major reason is not apparent from the excerpt set out above, certain
other shortcomings in this attempt are apparent in the excerpt (and these
shortcomings were repeated throughout the attempt to answer the question).
There are a number of shortcomings which can be identified in this attempt. First,
as this excerpt indicates, the answer had the appearance of being written hurriedly
without a great deal of thought as to what issues were presented by the problem
and how to resolve them. One way in which this rush has manifested itself is in the
poor English. There is, for example, little excuse for not capitalising the names of
the parties. Secondly, there was very little law considered or applied in this attempt
– as can be seen in the above excerpt, the candidate did not consider or apply any
statutory provisions or cases. While there is clearly some legal knowledge present
(e.g. the identification that the fault in the operating system requires redress), it is of
critical importance, in a law exam, to consider and apply the law. Thirdly, the
attempt indicates that the candidate has little accurate understanding of the law.
Thus the argument made by the candidate that the pincode which allowed the
customers to download the operating system from the internet meant that the goods
were ascertained is clearly wrong. The question is whether or not the operating
system is a good at all, since there is no physical res which contains the operating
system. And even if this process did make the goods ascertainable (which is clearly
wrong) no attempt was made to indicate why this concept of ascertainable was

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important in the context of a sale of goods contract. Fourthly, the issues, as can be
seen in this excerpt, are ordered in a random rather than logical manner. Fifthly,
there are no counter-arguments raised to the positions advanced in relation to those
issues which are identified. Sixthly, the answer concluded not with a summary of
advice to Superior but with a question setting out an issue. A better attempt to
answer the question would have concluded with a short summary of the advice to
be offered to Superior.
Question 2
‘English commercial law is based upon nineteenth century cases in which
courts decided mercantile disputes with a concern for sanctity of contract
and certainty of transactions. Successive European Union directives, enacted
to protect consumers, have fundamentally changed the nature of English
commercial law. The merits of both the approach and the resulting law are
questionable.’
Discuss.
General remarks
This is a broad question which requires candidates to consider the historical
development of English commercial law through judicial decisions and legislative
enactments (largely based upon decided cases). With regard to this portion of the
question, candidates can analyse the underlying purposes and directions of this
earlier form of English commercial law. Candidates then need to consider the
nature and extent of protection afforded to weaker parties by the European Union
through legislation such as the Unfair Terms in Consumer Contracts Directive
(Council Directive 93/13). An analysis of the desirability of the approach and
outcome of these changes is required. Good candidates will attempt to assess the
extent to which European Union legislation has changed the common law approach
to commercial law.
Law cases, reports and other references the examiners would expect you to
use
There is no set body of cases or legislation that needed to be employed to answer
this question. Candidates were invited to draw upon material from across the
syllabus. Candidates could, as noted above, analyse the Sale of Goods Act 1979,
as originally enacted, and the Consumer Rights Act 2015. In a similar fashion,
comparison could be made between the Unfair Contract Terms Act 1977 and the
Unfair Terms in Consumer Contracts Directive.
Common errors
A common error presented in attempts to answer this question was to focus upon
only one element of the question without regard to any other elements of the
question and without consideration of the underlying issue presented by the
question. This question required candidates to consider something of the different
approaches presented in the development of English commercial law and European
Union law and to develop an argument directed at resolving the issues of whether
or not the ‘merits of both the approach and the resulting law are questionable’.
A good answer to this question would…
develop an argument around the question set, essentially that English commercial
law and European Union law approach issues in commercial law attempting to
advance or further different objectives. Candidates were particularly asked to
address the issues of whether or not the merits of the approach and the resulting
law were questionable. A good answer supported the argument advanced by
reference to the legislation and/or the cases. Of importance to answering this
question was the need to analyse the different bases upon which English courts

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and legislators developed English commercial law (largely in the context of disputes
between merchants in which an underlying ethos of caveat emptor prevailed) and
the development of European Union legislation and decisions (in which concerns
about consumer protection and competition between member states prevailed).
Poor answers to this question…
viewed the question as an opportunity to write generally about any aspect of
commercial law which suited the candidate without regard to what the question was
directed at. A lengthy discussion of retention of title clauses is not, for example, an
answer to this question.
Question 3
‘In the development of our law, two principles have striven for mastery. The
first is for the protection of property: no one can give a better title than he
himself possesses. The second is for the protection of commercial
transactions: the person who takes in good faith and for value without notice
should get a good title. The first principle has held sway for a long time, but it
has been modified by the common law itself and by statute so as to meet the
needs of our own times.’ (Bishopsgate Motor Finance Corp Ltd v Transport
Brakes Ltd (1949) per Denning L.J.)
Discuss.
General remarks
This essay question requires candidates to consider the common law rule of nemo
dat quod non habet, embodied in s.21 of the Sale of Goods Act 1979 and the
exceptions to the rule. Candidates should also discuss the extent to which it is
accurate to say that the two principles struggle with each other.
Law cases, reports and other references the examiners would expect you to
use
The legal sources necessary to answer this question are addressed in Chapter 4 of
the subject guide. Candidates could also have referred to the excerpt from
Professor Bridge on ‘Transfer of title’ in the commercial law Study pack. In addition,
the following cases could also have been employed in answering this question:
Cundy v Lindsay (1878); Bishopsgate Motor Finance Corp Ltd v Transport Brakes
Ltd (1949); Jerome v Bentley & Co (1952); Lickbarrow v Mason (1787); Eastern
Distributors Ltd v Goldring (1957); Farquharson Bros & Co v C King & Co (1902);
Pearson v Rose & Young Ltd (1951); Car & Universal Finance Co Ltd v Caldwell
(1965); and Newtons of Wembley Ltd v Williams (1965). Candidates could also
make reference to the relevant provisions of the Sale of Goods Act 1979 (especially
s. 21) and the Factors Act 1889, s. 2.
Common errors
A common error made in attempting to answer this question was to fail to raise a
sustainable or coherent argument and, instead, to produce a highly descriptive
account of a narrow range of material – e.g. the decision in Cundy v Lindsay.
A good answer to this question would…
set out the meaning of the nemo dat rule and the exceptions to the rule, illustrated
by examples drawn from the case law and the relevant statutory provisions. In
doing this, a good answer sought to examine whether or not Lord Denning’s
statement – both in the identification of the two principles and the modern swing
towards the second principle – was still an accurate statement of the law in this
area.

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Poor answers to this question…
were ones which set out a mass of information – largely in the form of cases and
statutory sections – without an attempt to develop an argument which addressed
the question. While a good answer contains the necessary cases and statutes that
indicate a good knowledge of the relevant law, this information is used to support
arguments addressed to answering the particular question. Or, in other words, the
knowledge is used to indicate an understanding of the law and the ability to develop
a cogent argument.
Student extract
After introducing the title of her essay through an explanation of the nemo dat quod
non habet rule, this candidate then set out the various exceptions to the rule in her
introduction. This was followed by an important paragraph which set out the
argument to be developed in the answer:
Prima facie, at first glance, it can be said that by allowing so many
exceptions, the law has overridden the interest of the owner. However, in
fact, such an argument cannot subsist. There are no two principles striving
for mastery, as the victory always belongs to the true owner, despite the
numerous minor exceptions. In fact, these exceptions are unhelpful and leave
the third party without redress. To prove this argument, I will analyse and
point out the premises of the exceptions below.
[The candidate then set out in a comprehensive and thorough manner a
number of exceptions before discussing the particular exception set out in the
extract below.]
Sale under voidable title
This exception is criticised as there is no specific law or certainty to
distinguish between void and voidable title. In Lewis v Averay, the court held
that there was a voidable title. However, with an indistinguishable fact in
Shogun Finance v Hudson, the court held that there was a void title. It is
questionable whether or not distinguishing between void and voidable title is
still useful today as it cannot comprehend the complex matter nowadays as
what if it is done by Skype. The rule under void and voidable title is
unjustifiable with non-legal reasoning and even outdated!
Furthermore, if the voidable title is avoided, then the title will not pass to the
third party. In Car and Universal Finance v Caldwell it was a well established
principle that for a contract to be repudiated one must communicate with the
other contracting party. However the court held that in this case by reporting
to the police and the automobile association it sufficed to repudiate the
contract. This might be seen as a favour of the true owner but it is justifiable
as to the owner who is unable to communicate with the rogue as it is most
probable that he has absconded. Therefore, once the title is avoided, the
exception is inapplicable. …
Comments on extract
Overall, this attempt to answer the question received a first class mark because it
was an exceptionally good effort. The candidate introduced the topic with great
clarity by explaining the rule and outlining the principle exceptions to the rule. This
thoughtful structure, coupled with a clear argument displaying personal reflection,
was indicative of wider reading around the subject. An argument was advanced, as
can be seen in the excerpt above. The thoroughness of the consideration of each
exception was also commendable as it presented an excellent grasp of relevant
detail. As can be seen in the particular consideration of the exception of a sale
under a voidable title, the candidate identified the exception clearly. The exception

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was explained through the detailed explanation and analysis of the relevant case
law. This explanation indicated an extensive range of accurate information and
knowledge on this topic. The answer also critiqued the particular exception, a
critique that provided evidence of not only knowledge and understanding of the law
in this area but also demonstrated independent thinking by the candidate. In short,
strong critical insights were made with regard to the law and it was these insights,
coupled with the outstanding presentation and standard of the essay, which worked
to provide this attempt with a first class result.
Question 4
Marcus Ltd, a London shoe wholesaler, contracts to sell with free delivery at
Manchester, payment to be made in cash within one month, the following
goods: on 1 July, 10,000 pairs of men’s trainers to each of Norton Ltd and
Ophelia Ltd; and on 15 July, 5,000 pairs of women’s leather boots to Pablo
Ltd. On the 16 July, Marcus Ltd contract to sell 3,000 pairs of slippers to
Quentin Ltd on the basis that Quentin Ltd will pay for the slippers in three
equal monthly instalments.
Marcus Ltd despatches all of these goods by road to Manchester, using Zippy
Lorries plc, and supplies each buyer with a delivery warrant. Within a week,
Norton Ltd collect the consignment of trainers from Zippy Lorries. On the 5
August Marcus, in reading an online news item, learns that certain
Manchester shoe retailers are unable to pay their debts as they fall due
because of a drop-off in the demand for footwear in Manchester. Marcus Ltd
realises that none of the four Manchester merchants have paid for the
footwear ordered and immediately email Zippy Lorries and instruct them to
suspend all further deliveries; Marcus Ltd also emails each of its buyers to
state that it requires cash payment before delivery. Upon receiving these
emails, Ophelia Ltd, Pablo Ltd and Quentin Ltd present their delivery warrants
to Zippy Lorries.
Advise Marcus Ltd.
General remarks
This question required candidates to isolate the relevant issues from the facts
provided to them and to apply the law to predict the likely resolution of these issues.
The question is concerned with aspects of the sale of goods in a series of business
to business transactions. The question required candidates to consider and apply
the relevant provisions of the Sale of Goods Act 1979 to ascertain the remedies
available to the seller, Marcus Ltd.
Law cases, reports and other references the examiners would expect you to
use
Section 4.5 of the subject guide to commercial law and, importantly, Chapter 6 of
the guide outlines the law necessary to answer this problem question. The following
statutory provisions are relevant to the resolution of this problem: ss.16–18, 28, 32,
and Part V of the Sale of Goods Act 1979. The following cases are also relevant:
RV Ward v Bignall (1967); Stein, Forbes & Co v County Tailoring Co (1916); Colley
v Overseas Exporters Ltd (1921); Valpy v Gibson (1847); The Tigress (1863);
Taylor v Great Eastern Ry Co (1901); and Reddal v Union Castle Mail Steamship
Co Ltd (1914).
Common errors
A common error exhibited in attempts to answer this question was to focus upon the
passing of property and not to identify the central issue of what remedies were open
to Marcus. Another common error exhibited in attempts to answer this question was

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to consider that issues concerned with retention of title clauses were presented on
these facts.
A good answer to this question would…
Understand that the central issues presented by these facts revolve around the real
remedies of the seller, Marcus Ltd. And, if a real remedy is not open to Marcus Ltd,
what personal remedies are available? The question involves four buyers, each with
slightly different contractual terms of sale. While Norton Ltd and Ophelia Ltd have
the same contractual terms of sale, the relevant distinction is that Norton has
collected its order from the carrier, Zippy Ltd, while Ophelia Ltd has not. A good
answer considers what, if any, differences these factual variations make in the legal
resolution of each set of contracts.
A preliminary issue, although not one which presents much difficulty in these
instances, is when does property in the goods pass? As these are all contracts for
specific goods, the right of property passes when it was intended to pass. The
intention of the parties is determined by ‘the terms of the contract, the conduct of
the parties, and the circumstances of the case’. Property can pass even though the
time for payment or the delivery has not yet arrived. In the absence of intention,
property in the sale of specific goods in a deliverable state passes when the
contract is made, regardless of whether the time of payment or delivery are
postponed. Good answers considered when property passed to establish that it had
in each of these sets of contracts.
The most important part of this question concerned the remedies available to
Marcus Ltd. Marcus is an unpaid seller because the whole of the price has not been
paid or tendered in any of the four contracts. Of particular importance to Marcus are
his rights in rem against the footwear in each of the four transactions. These rights
can be exercised even though property in the goods has passed to the buyer but
not where delivery has been made to the buyer. For this last reason, the contract of
sale with Norbert Ltd is not one over which Marcus can obtain a real remedy. In this
instance, a good answer considered whether or not the conditions had been met for
a successful action for the price.
With regard to the remaining three contracts, the question arises as to whether or
not delivery has been made by Marcus Ltd. There is a good argument here that the
transfer of possession of the goods to the carrier, Zippy, constitutes delivery. If
Marcus Ltd has lost possession of the goods, he will be unable to assert that he has
an unpaid seller’s lien under s.41 of the Sale of Goods Act 1979 unless he has
reserved a right of disposal in the goods. If he has not lost possession, he may be
able to assert this lien exists in relation to those contracts where the goods have
been sold on credit but the term of credit has expired – under the terms of the
relevant contracts, this is only Ophelia Ltd. The term of the credit has not expired for
either Pablo Ltd or Quentin Ltd. It may be that the buyers have become insolvent
and, for that reason, Marcus Ltd has a right of lien. A good answer would also
consider whether or not Marcus had a right of stoppage in transit over the goods by
reason of s.44 of the Sale of Goods Act 1979.
A final issue to be determined here is whether Marcus Ltd is able to seek a personal
remedy, either because his real remedies are no longer available or in the
alternative to these real remedies. On the facts given here, only Norbert Ltd and
Ophelia Ltd have not paid the price when due.
Poor answers to this question…
failed to address the essential issue presented in the facts of this problem. What
remedies (real and, perhaps, personal) are available to Marcus Ltd in these
different circumstances?

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Question 5
Portia is an Arctic explorer who also owns a London restaurant. Portia
appoints Antonio ‘to manage the restaurant’ in the four months she will be
trekking in the Arctic. She instructs Antonio to buy a new freezer system for
the restaurant ‘for roundabout £40,000’. She also tells him not to order
tableware while she is in the Arctic. Finally, she tells him not to order any
meat from Gobbo’s Meats as she has had a serious disagreement with the
owner of the firm.
Portia has now returned to London from the Arctic and discovered that the
following events have taken place in her absence:
a) Antonio has ordered £15,000 worth of beef from Gobbo’s Meats and
Gobbo’s are now demanding payment for the beef;
b) Antonio bought a freezer system for £48,000, which is more than
Portia wants to pay and the dealer now seeks payment for the
system;
c) Antonio had arranged for some of the windows at the front of the
restaurant to be replaced at a cost of £30,000 and the contractors
have sent an invoice for this replacement; and
d) Antonio bought new tableware for the restaurant because he noticed
that the existing tableware lacked the corporate logo of Portia’s
restaurant. The tableware suppliers, who assumed Antonio owned
the restaurant, are demanding payment.
Advise Portia.
General remarks
This question requires candidates to isolate the relevant issues from the facts
provided to them. The question is concerned with aspects of the law of agency. The
particular issues which candidates need to address is to establish the nature of A’s
agency and the authority A has to bind P. Part (a) raises the issue of whether or not
A can bind P where P has specifically requested A not to deal with G. If P is not
bound, is A personally liable? Part (b) raises the issue of whether or not A had
actual authority to purchase the freezer; is £8,000 over within ‘roundabout
£40,000’? If A did not have actual authority, does apparent authority exist? Part (c)
raises the issue of whether or not the replacement of the windows falls within the
apparent authority or the usual authority of A. Are the windows really necessary to
the running of the business in the short-term? Part (d) raises the issue of whether or
not the purchase of the tableware is necessary. While A has been instructed not to
purchase tableware, is the lack of a logo a sufficient reason to overcome this
restriction? And if not, is there an apparent authority or usual authority to make the
purchase?
General remarks
This question requires candidates to isolate the relevant issues from the facts
provided to them. The question is concerned with aspects of the law of agency. Two
particular sets of issues arise on the facts of this problem. The first issue is the
nature of A’s agency; the second issues (or more accurately, set of issues) turns on
whether or not A has the authority to bind P in the instances set out in paragraphs
(a) to (d).
Law cases, reports and other references the examiners would expect you to
use
The law with which this problem is concerned with is considered in Chapter 2 of the
subject guide. A number of different legal cases could be applied to the issues

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presented by these facts. These include: Ireland v Livingston (1872); Aviva Life &
Pensions UK Ltd v Strand Street Properties Ltd (2010); Jacobs v Morris (1902);
Rosenbaum v Belson (190); Bryant, Powis and Bryant Ltd v Law Banque de Peuple
(1893); Watteau v Fenwick (1893); Hely-Hutchinson v Brayhead (1968); Robinson v
Mollett (1875); Freeman and Lockyer v Buckhurst Park Properties Ltd (1964); Rama
Corpn Ltd v Proved Tin and General Investment Ltd (1951); The Tatra (1990); First
Energy Ltd v Hungarian International Bank Ltd (1993); Armagas Ltd v Mundogas
(1986); and Overbrooke Estates Ltd v Glencombe Properties Ltd (1974).
Common errors
A common error was to write everything the candidate could think about agency
without identifying the issues presented in these facts or how the issues could be
resolved. An even more egregious error committed by some candidates was to
interpret the entire problem as one which was concerned with the sale of goods and
to apply provisions of the Sale of Goods Act 1979 to the facts given in the problem.
This latter error gave rise to the unfortunate impression that the candidate had not
studied even the rudiments of agency law.
A good answer to this question would…
identify at the outset that the facts gave rise to two broad categories of issues. First,
what is the nature of the agency Portia has given to Antonio to manage the
restaurant in her absence? Secondly, in the various instances presented in
paragraphs (a) to (d) does Antonio have the authority to bind Portia to these various
contracts?
In resolving the problems presented under this second set of issues, good answers
to this question dealt with each of these variants in turn. Paragraph (a) raises the
issue of whether or not A can bind P where P has specifically requested A not to
deal with G. If P is not bound, is A personally liable? Paragraph (b) raises the issue
of whether or not A had actual authority to purchase the freezer; is £8,000 over
within ‘roundabout £40,000’? If A did not have actual authority, does apparent
authority exist? Paragraph (c) raises the issue of whether or not the replacement of
the windows falls within the apparent authority or the usual authority of A. Are the
windows really necessary to the running of the business in the short-term?
Paragraph (d) raises the issue of whether or not the purchase of the tableware is
necessary. While A has been instructed not to purchase tableware, is the lack of a
logo a sufficient reason to overcome this restriction? And if not, is there an apparent
authority or usual authority to make the purchase?
As always, good answers applied the criteria in the relevant case law to form
strong, coherent and persuasive arguments around the issues presented on these
facts.
Poor answers to this question…
tended not to identify with clarity or certainty the various agency issues presented
by the facts of this problem. In other instances poor attempts to answer these
questions were those which cited case names with little or no attempt to apply the
principles established in these cases.
Question 6
‘[T]he Commercial Agents (Council Directive) Regulations 1993 has created
an entirely new and commercially significant form of agency, whose enacted
principles are at variance with the traditional common-law agency rules.’
(Munday, Agency Law and Principles)
Discuss.

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General remarks
This essay question calls for a consideration of the nature of the Commercial
Agents (Council Directive) Regulations 1993 and the extent to which the enactment
of this European Union directive into English law marked a radical departure from
the common law liabilities contained within the agent-principal relationship.
Law cases, reports and other references the examiners would expect you to
use
This type of essay question can be successfully answered in many different ways
and for that reason it is impossible to produce an exhaustive list of those materials
which could be used to answer the question. While the Commercial Agents (Council
Directive) Regulations 1993 and those cases interpreting it (e.g. Lonsdale v Howard
& Hallam Ltd (2007)) should be employed in attempting to answer this question, a
wide range of cases could be used to establish the position of the common law.
Many of these cases can be found within Chapters 2 and 3 of the subject guide and
also in the agency sections of Sealy and Hooley’s Commercial law: text, cases, and
materials, especially Chapter 6.
Common errors
The biggest common error presented in attempts to answer this question was to
avoid what the title required a discussion of – namely the Commercial Agents
(Council Directive) Regulations 1993.
A good answer to this question would…
consider not only the European Union directive implemented by the 1993
Regulations and the interpretive cases concerned with the Regulations but also the
common law cases concerned with the rights and duties of agent and principal. A
coherent and measured attempt to discuss and evaluate the two bodies of law was
required to answer this question well.
Poor answers to this question…
devoted extensive efforts to reciting provisions of the 1993 Regulations or
describing the Regulations without any attempt to analyse them in relation to the
common law of agency. A related variant, equally poor, was to describe the
common law of agency on a case by case basis but not to relate this discussion in
any way to the 1993 Regulations.
Question 7
‘The whole commercial purpose for which the system of confirmed
irrevocable documentary credits has been developed in international trade is
to give the seller an assured right to be paid before he parts with control of
the goods. This does not permit of any dispute with the buyer as to the
performance of the contract of sale being used as a ground for non-payment
or reduction or deferment of payment.’ (United City Merchants (Investments)
Ltd v Royal Bank of Canada, The American Accord (1983) per Lord Diplock)
Discuss.
General remarks
This essay question required candidates to consider what is meant by autonomy of
documentary credit as described by Lord Diplock in the particular quote.
Law cases, reports and other references the examiners would expect you to
use
The materials necessary to answer this question can be found in Chapter 8 of the
subject guide and Chapter 21 of the Sealy and Hooley’s Commercial law: text,
cases and materials.

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Common errors
A common error exhibited in attempts to answer this question was to write generally
about documentary credits without addressing the question set.
A good answer to this question would…
A good attempt to answer this question began with an analysis of what Lord Diplock
meant when he described the autonomy of documentary credit. A good answer
would, in undertaking this primary function, also consider the narrow exceptions to
this principle, illustrated with reference to the relevant cases. Good attempts to
answer this question demonstrated a good understanding of the UCP600 and how
courts have interpreted it.
Poor answers to this question…
described UCP600 rather than analysing it.
Question 8
‘[A] true f.o.b. or a true c.i.f. is a comparative commercial rarity. Contracts
vary infinitely according to the wishes of the parties to them.’ (The Albazero,
(1977) per Roskill LJ)
Discuss.
General remarks
This question calls upon candidates to consider the nature of a cif and a fob
contract and the extent to which the parties’ rights and obligations under these
contracts differ. Whether a contract is one or the other is a matter of contractual
interpretation and candidates should discuss how this process takes place. Finally,
candidates need to consider the need for the law to place a contract within one or
the other of these categories.
Law cases, reports and other references the examiners would expect you to
use
Many different materials could be drawn upon to answer this question – to list any
specifically is to deny the potential relevance of those not listed. The legal materials
necessary to answer this question are outlined in Chapter 7 of the subject guide.
Candidates might also have made use of the articles set out in the commercial law
study pack (e.g. Treitel’s ‘Rights of rejection under c.i.f. sales’ and/or Ademuni-
Odeke’s ‘The nature of cif contract – is it a sale of documents or sale of goods?’).
Cases which could be employed in attempting to answer this question include:
Scottish & Newcastle International Ltd v Othon Ghalanos Ltd (2008); Pyrene Co Ltd
v Scindia Navigation Co Ltd (1954); The Parchim (1918); The Gabbiano (1940);
Johnson v Taylor Bros & Co Ltd (1920); and Berger & Co Inc v Gill & Duffus SA
(1984).
Common errors
The most common error committed by candidates attempting to answer this
question was to attempt to write everything they could think of about the particular
form of a c.i.f. or an f.o.b. contract in general terms, with no particular order to the
way in which the answer was structured. No attempt was made in these answers to
address the material presented to the question set. Another common error was to
write an essay on a particular aspect of an f.o.b. or c.i.f. contract with no attempt to
utilise this information to answer the particular question.
A good answer to this question would…
develop a reasoned argument around the sources of law employed in their
answers. Creativity, flair and good grammar all contributed to the strong attempts at
answering this question.

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Poor answers to this question…

recited various materials and sources without any attempt to develop a coherent
argument addressed at answering the particular question. In other cases,
candidates appeared to have drawn upon prepared answers to another question –
such as, for example, the nature of c.i.f. or f.o.b. contract without any attempt to
relate this information to an argument or thesis.

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