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www.law.cardiff.ac.uk/law-
politics

Commercial Law: 2023-24

TUTORIAL FEEDBACK

TUTORIAL THREE: Passing of property and risks

Tutorial feedback will not necessarily provide you with ‘model’ answers, but will provide feedback
on how to go about finding the answers to the questions. Tutorial feedback will also outline what
students did well, and where things needed further attention. It identifies the scope of what we are
looking at in the module. The feedback may also include suggestions for further sources of
information where there have been topical developments, if relevant.

Aims of tutorial

This tutorial covers the passing of property and risk. It covers both problem question and essay
question.

General comments

Most students demonstrated a good level of preparation this week and were able to participate in
the discussion.
However, we note a lower attendance to tutorials this week. We are aware of few illnesses, but
please note that if you are struggling with the workload and/or tutorial related anxiety, there is
support available here:

Our Student Support Manager has created a short video for you with helpful tips and tricks to help
you navigate this feeling and feel more comfortable in attending these sessions moving forward.
Please see the video attached.

Managing Seminar & Tutorial Anxiety

If you’d like to know more about support services within the university, please see below:

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Self-help resources at: Self-help resources - Student intranet - Cardiff University
Wellbeing Workshops at: Workshops, courses and groups - Student intranet - Cardiff University
Support from a fellow student: Support from a fellow student - Student intranet - Cardiff University
Student Connect: Student Connect - Student intranet - Cardiff University
If you have severe circumstances which are impacting your attendance and/or wellbeing, please
contact us on the following email:
Contact the School’s Student Support Team: LAWPL-circumstances@cardiff.ac.uk

For those who attended, we noted a good level of engagement in most groups (students were also
asking questions on the topic which is very positive). Most students continued to demonstrate a
good grasp of the methodology to answer problem questions (Identify the legal issue/ identify the
applicable Rules (relevant statutory provisions and case law)/ Apply to the facts/ and Conclude). As
for tutorial 2, stronger students were able to identify and discuss the extent to which relevant
supporting evidence from relevant legal authorities applied in the problem questions. Remember
that it is important to discuss the relevant legal authorities to the extent it is useful to your analysis/
argument.

However, we note a recurrent issue that some students continue to jump directly from the legal
issue to the conclusion. Please do make sure that you consider each step required of the analysis
before jumping to the conclusion (e.g. do we have specific or unascertained goods? If specific goods,
turn to parties’ intention (s. 17 SGA)… IF unclear, apply s. 18 Rules 1-4 or 18 Rule 5 for ascertained
goods..).

Feedback on tutorial questions

This tutorial includes a short problem question on the topic of passing of property/risk and an essay.
The problem questions aimed to provide students with an overview of the kind of situations which
can arise in relation to the passing of property and risk.

For the problem question, students were expected to identify the relevant legal issue and applicable
relevant statutory provisions and legal authorities.

Tips: Make sure you don’t skip the various stages in your answer (i.e. Don’t jump to the conclusion
without explaining reasoning). The first step is to identify whether we have specific or unascertained
goods. This is important because the applicable rules are different. If we have specific goods, we
must then turn to parties’ intention (S17), only then can you apply the rules contained in S18 if
unclear. For the essay, you should have a produced a detailed outline of your main arguments with
reference to appropriate supporting evidence. Make sure your answer adopts a coherent and logical
structure.

Problem question:

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 (a) Smith Ltd is a company specialising in the rescue and recovery of large vehicles. For this
work it needs specialised recovery vehicles and tow trucks. Last January Smith Ltd entered
into a contract with Jones Ltd to purchase a unique “Super Recovery Truck” which was
specially designed to meet their towing needs. Smith Ltd paid £70,000 for this truck. The
contract made no mention of when the ownership in the truck was to pass to Smith Ltd.
However, it was agreed that the truck should be kept at Jones Ltd’s workshop until Jones
Ltd had fully fixed essential towing machines onto the back of the truck. On 15 February,
before this work was complete, an accidental fire broke out in Jones Ltd’s workshop. The
truck was damaged in the fire and is now not suitable for use as a recovery vehicle,
although it is still useable as a general vehicle. Smith Ltd is refusing to accept the damaged
truck. They want their money back and also want to sue Jones Ltd for failure to deliver the
truck.

Advise Smith Ltd.

(b) Grains Ltd owned 100 tons of wheat which was being shipped in the Queen Cersei which is
traveling from Liverpool to Cardiff. They sold 30 tons of the cargo of wheat to Keating Ltd
and an additional 20 tons of the cargo to Meegan Ltd. Both Keating Ltd and Meegan Ltd
paid for the 50 tons in advance and took out insurance to cover the risk of loss of, or
damage to, the cargo. However, before the ship reached its destination, Grains Ltd
became insolvent and went into liquidation. Keating Ltd is worried about whether it can
claim ownership in the wheat and/or recover the money paid.

Advise Keating Ltd.

(a) First, you need to identify the legal issue (i.e. passing of property/risk). You then need to
query whether we have specific or unascertained goods. This is important because
applicable rules are different. Here, we have specific goods (the truck is described as
“unique”). Please make sure to look at the statutory definition of specific goods (s. 61(1)).

As the contract makes no mention of when the ownership is to pass (s. 17), we must look to s.18.
Decide whether S. 18 rule 1 applies, or whether rule 2 applies.

S. 18 rule 1 provides that if goods are in a deliverable state, property passes when the contract is
formed. S. 18 rule 2 provides that if goods are not in a deliverable state, then property passes when
the goods are in a deliverable state and the buyer has notice of this. Thus at this stage we need to
discuss whether s.18 rule 1 or rule 2 applies. This depends on whether the goods can be said to be in
a “deliverable state”. There are several cases on the issue that you are expected to discuss (eg
Anderson v Ryan, Anderson v Havana, Underwood and Tarling v Baxter). It is important to contrast
the results in these cases and discuss which would apply to this situation, rather than simply
referring to one case or not discussing the issue at all.

Conclusion: property remained with the seller, and the risk also remained with the seller.

You should also discuss at this stage whether the seller has a defence to any action by the buyer for
failure to deliver – i.e. would s.7 apply? (Goods have perished after the agreement but before risks
have passed) Some students omitted this. You would in particular be expected to discuss whether
the truck can be said to have “perished”, given that it is capable of being used as a general vehicle.
The test in the New Zealand case of Oldfield Asphalts (the term perished meant that the object of

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the goods is so affected that it was no longer fit for purpose) would be a useful reference here. See
also Asfar & Co v Blundell ( goods will be deemed to have perished if they become significantly
altered so that, for commercial purposes, they can no longer be said to be the same goods that were
the subject of the contract).

******************************************************************************

(b) This question concerns unascertained goods (goods forming part of a bulk) and it is a
situation to which the reforms (s.20A &B) probably apply. As above, it is best to discuss the
basic rules first i.e. to discuss whether the goods are ascertained as required by s.16.
Important cases here include Re Wait, Goldcorp, London Wine Co, Staplyton Fletcher etc.

The taking out of insurance is irrelevant to the question of ascertainment – it may show an intention
that the parties believed the property in the goods to have passed to the seller, but as seen in the
above cases this is not enough—the goods must also be ascertained.

Turning then to the reforms (i.e. s.20A and 20B), you should explain how the criteria are met and
then discuss how they might apply.

Essentially, Grains Ltd, Keating Ltd and Meegan Ltd will be co-owners of the goods in the ratio
50:30:20.

Question 2 Essay

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 ‘The rules relating to the passing of property and risk contained in the Sale of Goods Act 1979
are among the most unsatisfactory provisions contained in the Act.’

Tips: It is very important that you first carefully read he essay question (do not start writing
everything you know on passing of property/risks without thinking of a clear direction to your
essay/argumentation). The difficulty with an essay question written as a ‘statement’ is to find an
angle of analysis which will provide a critical viewpoint. It is up to you to find the underlying legal
question(s). Here you are required to critically analyse the rules on passing of property and risks
contained in the SGA and to critically discuss the extent to which they are considered (or not)
unsatisfactory. Are they unsatisfactory because they create uncertainties for the commercial
parties? And/Or because they create unfair results for the parties involved? Or something else? IF
unsatisfactory, any Ideas/suggestions for reforms?

Your introduction should provide some definition of the terms contained in the essay title, provide
some context and identify the legal issues that will lead the developments of your essay. You are not
expected to review ALL rules relating to passing of property/risks, but if you decide to only focus on
some and not others, you should make that clear in your introduction. Many students decided to
focus on s.20A and s. 20B which is really good as it provides an interesting critical viewpoint of the
rules on passing of property/risks, but you should also offer a critic of other rules.

General ideas for direction:

This question required a critical discussion of the rules in SGA relevant to property and risk.

You might draw on the difficulty of determining intention for s.17 given that the Act links the
concept of property to different consequences (risk, insolvency, s.49 etc.) and the antiquated criteria
in s.18 (i.e. rules developed around the 18-19th centuries which may have only limited relevance to a
modern commercial context).

You would then go through the rules and mention some of the difficulties of interpretation (e.g. the
problem of determining the meaning of ‘deliverable state’ or ‘unconditional appropriation’). This is
fine (so long as the difficulties are covered) as is the discussion of s.16, Re Wait and reform in s.20
(A) & (B). You would get good marks for criticism of the reform made by s.20(A) & (B)(e.g. it doesn’t
deal adequately with risk, the problem of first come first served and the failure to provide wholesale
reform including protection of the type of buyers in Re Goldthorp Exchange and Re London Wine
situations including mention of articles e.g. by Burns etc.).

The link with risk in s.20 and the consequences of separating passing of risk from delivery is also an
important consideration. You could also cover the rules on risk as well as property (including s.20(2)
and (3)). We would hope to see discussion of the problems of s.6 & 7 including the problem of the
meaning of ‘perish’ and the fact that they produce inflexible results if applied strictly – cf Barrow
Lane & Ballard v Phillip Phillips with Sainsbury v Street.

(the application of both provisions is very narrow. S.7 applies to contract in which neither the
property nor the risks has passed... But if we look at rules on passing of property for specific goods
(at least for those in a deliverable state s. 18 rule 1), both property and risks pass at once!

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The word 'perish' in both s. 6 and 7 is also unclear (you can discuss case law here to support
argument). Finally, the consequence of the application of s. 6 and s.7 is also unclear where only part
of the goods has perished and the rest has been delivered to the buyer.

There is an excellent discussion/ critic of s. 6 and s. 7 in Atiyah and Adams' Sale of goods (13edn
Pearson) at pp. 77-85 and pp. 286-287. These sections discuss both cases Barrow Lane & Ballard v
Phillips and Sainsbury v Street to illustrate discussion (access via CU library search/ Kortext).