Unit Activities

Activity 9.1
Victor operates a small independent dairy but has decided to cease business frustrated at the
increasing amount of EU regulations. He owns a Bedford van, which he has used to make
deliveries of milk and dairy produce, and asks Simon, who sells light commercial vehicles, to
sell it for him.
Paul has recently started a business manufacturing his own brand "Mister Cream" ice cream and
wants to purchase a van for use as an ice cream van. He asks Arthur, a mechanic, to look out for
a suitable van for him.
Arthur sees the Bedford van at Simon's premises but does not realise that it belongs to Victor.
He explains to Simon that he is interested in the van for use as an ice cream van. Simon replies
that he is "no expert" on ice cream but advises that the Bedford has previously been used to carry
dairy produce and that he thinks it should be suitable. Arthur makes a cursory examination of
the van, which includes examining the engine, starting it up and driving it around the block (a
distance of about half a mile) and then agrees to buy it. Simon asks him to sign a contract for the
van, and produces a printed form headed "Simon's Vehicle Sales: Vehicle Sale Contract "Arthur
signs the form as "buyer" without reading it. He pays for the van with cash, withdrawn from the
bank by Paul for that purpose.
For the first month Paul uses the van for general purposes while he is setting up his business. He
does not use it to deliver ice cream during that time. The first time he uses it on his ice cream
round the engine over heats and seizes. Moreover he discovers that the refrigeration plant,
although suitable for keeping milk, cheese and yoghurt chilled, is inadequate for keeping ice
cream frozen and all of his stock of ice cream melts. He is advised that the van will need
expensive repairs to enable it to be used on the road as a delivery van but cannot be used as an
ice cream van without replacement of the refrigeration unit and extensive modification.
However, when he complains to Simon, Simon denies all liability, claiming that Victor was the
seller of the van, that in any case he sold it to Arthur, and drawing Paul's attention to a clause in
the contract, signed by Arthur which states that:

“No warranty of quality or fitness for any purpose is given. Simon's Vehicle Sales accept no
liability for any defect in any vehicle supplied.”

Advise Paul.

Activity 9.2

Recess Ltd are wholesale commodity dealers specialising in Rice. Consider the legal
consequences of the following transactions in which they are involved.

On 1st November they entered into a contract with Em Minim for the sale to Em of 100 sacks of
rice, to be collected by Em on 5th November. On 2nd November Recess took 100 sacks from
their warehouse and affixed them to labels saying "Em Minim". The sacks were moved and
stored in the despatch area of the warehouse. On 5th November Em sent a representative to
collect the rice but it was discovered that the sacks marked with Em's name had been ruined as a
result of being soaked with water penetrating the warehouse despatch area through a hole in the
roof caused by vandals.

Also on 1st November they contracted with Croft Ltd to sell them 200 sacks of beans, to be
delivered in Derby where Croft have their headquarters. On 3rd November 200 sacks were duly
despatched by British Rail to "await collection", and Croft were informed of the despatch. On
the same day Croft entered into a contract to sell "200 sacks of rice" today, despatched to us by
Recess Ltd to Shaggy. The contract required Croft to repack the beans in 2kg packages and load
the packages onto pallets prior to delivery. On 4th November Recess were informed that the
beans had arrived in Derby and could be collected. They authorised delivery to Croft who sent a
representative to Derby station to collect the beans. It was then discovered that the beans had
been delivered on the evening 3rd November and that, overnight, thieves had broken into the
railway station and had stolen 50 sacks. The market price of rice had risen sharply on 3rd
November and Shaggy demands delivery at the contract price.

On 1st November Recess had in stock 500 sacks of Vietnamese rice. On that day they were
examined by a representative of Defjam Ltd who agreed that they would buy all 500 sacks,
property to pass on payment of the price of £5000. On l5th November Defjam collected the
beans and paid the contract price; however, on opening the sack they discovered that they had
become so badly infested with rice-mites as to be totally unusable. It is established that the
infestation occurred after 1st November. In the meantime the market price of similar rice has
risen to £15 per sac. Did the property and risk pass.