Revision

1
Revision

• Winter 2006

2
Student Question 1

• Please revise nemo dat exceptions
• See presentation 4 slide 37
• Also note in Negotiable instruments, the concept
  of holder in due course

3
Student Question 2

• Please go over the assignment.
• The marking scheme for this Q was the same as
  that used for exam questions-
• Understood the Q
  2
• Answered the Q
  2
• (a) Breaches-such as basics.contract, TPA 4B,
  74, 52, 53 9
• (b) Remedies-online and ZZZ-in contract, under
  TPA (80,82,87) 8
• Reasoning 2
• Other items-e.g. negligence, financial services,
  ASIC act 2
• TOTAL
  
  25
• To achieve a mark out of 100, the result was
  multiplied by 4.

4
Outline plan for the answer

• The nature of the transaction-one or more
  contracts for services
• Who were the contracting parties-Simon and
  Online, ZZZ?
• What were the express terms of the contract?
• What were the implied terms -at general law and
  implied by statute?
• Conditions or warranties?
• Are there any preconditions? E.g. Was Simon a
  consumer for s. 74TPA?
• If so, were they met?
• Action to bring-breach of contract
• Damages-type and method of calculation of amount
• Statutory provisions relevant?
• Coverage of ss. 52 and 74 ideally also s. 53 an
  s. 12DA of ASIC Act
• Criteria for application? Were they met in this
  case?
• Remediesss.80,82,87what they could achieve in
  this situation.
• Damages, orders, types, amounts
• Development of arguments rather than pure
  description for both contract action and Statute
• Use of Cases to illustrate argument e.g. Seeley,
  Arms or others as applicable (not just quotes
  from text with footnote of name of case)

5
Issues arising during marking

• In an answer, students were expected to identify
  the situation as being one of a contract for
  services. A number of students spent a couple of
  pages on this, which is too much in the context
  of this assignment. A surprising number of
  students equated the design and delivery of a
  retail website as a sale of software and
  discussed Toby and St. Albans before concluding
  that the nature of the contract involved mostly
  skill and was therefore services. While they came
  up with the correct conclusion, and could have
  referred to this by analogy or developed argument
  in support of such an interpretation, most did
  not use this in that way. It is a concern that
  they saw the transaction as a sale of software,
  rather than design and programming to produce the
  website (the end result item of personal
  property). It is difficult to give good legal
  advice if one does not have a clear understanding
  of the underlying transaction.
• A couple of people treated the transaction as
  being one of a sale of goods instead of
  services.leading to incorrect analysis and
  application of wrong TPA sections.

6
Issues cont (2)

• A couple of people assumed incorrectly that Simon
  needed to be a consumer to have access to any
  section of TPA. While this is true of s. 74, it
  is not true of s. 52 et al. For the s. 74
  purposes, students should have analysed whether
  Simon was a consumer. Most did.
• A number of students revealed a superficial or
  incorrect understanding of the terms and
  application of ss 52, 74 TPA usually combined
  with what appeared to be parts of the text
  borrowed into their answer, rather than original
  argument. This results in a descriptive answer,
  and poor preparation for handling problem
  questions.

7
Issues cont (3)

• A considerable number of students incorrectly
  assumed that the result of a breach of an implied
  warranty under s. 74 would result in an action
  for damages pursuant to s. 82 of the TPA. As it
  is the contract that is breached (with the term
  implied into it), the correct action is one for
  breach of contract at common law. The TPA
  remedies in 80, 82, 87are available for breaches
  of statutory provisions e.g. 52,53. A good number
  of students did have an excellent understanding
  of the application of ss. 82, 87 for damages,
  noting that s. 82 only applied to present damages
  suffered (which could include a present value
  calculation for lost Christmas sales) whereas an
  order for likely damage could be awarded under s.
  87 if the court discretion was exercised.

8
Issues cont (4)

• Students should have examined where there were
  possibilities for an action in breach of contract
  for express terms as well as s. 74 and in the
  process discussed the difference between
  conditions and warranties. A good number of
  students did so.
• A lot of answers were descriptive rather than
  analysis, application and argument and such
  answers cannot result in good marks. Students
  always find it easier to describe what a court
  should find in a very general way, rather than
  argue for what a court should find in a specific
  way, as the latter requires a better knowledge of
  sections and familiarity with argument in the
  cases. It is necessary to spend a lot more time
  in study of actual sections and cases to do this,
  rather than read summaries in the text. For
  example, with remedies and damages, it is
  necessary to work through the type and amounts of
  damages that should be granted, supported by good
  argument and case and statute references not
  just state that the person could bring an action
  for damages, without more.

9
Student Question 3

• When is the Vienna Convention appropriate?
• Applies to international contracts between two
  countries that are party to the convention,
  unless it is specifically excluded.

10
Student Question 4

• Is it possible to contract out of SOGA or the
  TPA?
• Yes, to some extent.
• SOGA-
• Yes, everything for non consumer sale.
• Yes, everything other than ss. 18, 19, 20, in the
  case of a consumer sale.
• TPA-No, but bear in mind some provisions only
  apply to a consumer e.g. 69,70,71,72,74 and
  some limits possible e.g. 68A and 68B.

11
Student Question 5

• Please revise sub-bailments
• See module 6 Bailments

12
Student Question 6

• What happens when registration systems overlap?
• There may be a statutory exception. E.g. if an
  interest is registrable under RIGA, it does not
  have to be registered under SIGA.
• Sometimes you just have to cope with 2 registers
  e.g. Trade Marks and ASIC

13
Student Question 7

• Please explain book debts and also within the
  context of fixed and floating charges.
• See security modules 9,10

14
Student Question 8

• Mr. Mendel said that one could get the ACCC to
  take action under s. 53 TPA but not s. 52. Please
  explain.
• See s. 75AZC in Part VC
• Criminal Offence provisions to line up with
  Commonwealth Criminal Code. Mens rea required.
• s. 75AZC is a -Mirror provision of s. 53. Can be
  offence with fine.
• No equivalent criminal Part VC provision for s.
  52.

15
Student Question 9

• When we are considering goods, we have both the
  SOGA and TPA. When is it better to bring an
  action under one or the other?
• When there is only one available. E.g. a non
  consumer may only have the implied terms of the
  SOGA, if any at all.
• When a choice provides a better, easier, cheaper
  action or more appropriate remedy.

16
Student Question 10

• Please go over Bills of Exchange again-as they
  are used in finance and in the import/export
  scenario.
• See Module 7, slides 6,7,8 and the Westpoint
  example at slides 32,33,34.

17
Student Question 11

• Where there has been a consignment of goods from
  A to B on the basis that A owns the goods but
  consigns them to B to sell them to C or return
  them to A, does B, as bailee at common law and as
  a mercantile agent, become the buyer in s. 5
  SOGA for the purposes of s.23 rule4?
• Yes, unless there is a contrary intention from
  the contract or the surrounding circumstances.
  Note that s. 23 is always subject to that
  proviso.

18
Student Question 11a

• If so, I am assuming that A, in delivering
  possession of the goods to B and authorizing B to
  sell the goods, A has in effect pledged the goods
  to B and has passed property from A to B,
  although not title to those goods.
• No, I am afraid this is not correct. A pledge is
  a form of security and is not happening here. The
  first part of your Q was correct. Consignment is
  a type of bailment. Title would only pass in
  accordance with the contract made or s.23 Rule 4
  SOGA. Subject to these two things, Possession has
  passed but not title.

19
Student Question 12

• Please let me know what s. 12(2) of the Cheques
  Act means. Is it saying that an order to pay will
  be conditional (and therefore not a cheque), if
  it tells the bank which account is to be debited?
  
• No. Unfortunately, the draughtsperson of s. 12(2)
  used a double negative, which makes it difficult
  to understand.
• s. 12(1) states that an order to pay on a
  contingency is not an "unconditional order to
  pay", Such an instrument is not a cheque and does
  not become a cheque if the contingency happens.
  So, if the order is subject to the contingency
  "if there is more than 1,000 in my account", it
  is not a cheque and it does not matter if there
  is, in fact, more than 1,000 in the account at
  the time.
• s. 12(2) clarifies that having two other things
  on the cheque (the particular account to be
  debited or the transaction giving rise to the
  payment) do not, by themselves, not make it
  conditional. These things, if combined with other
  factors MIGHT make it conditional.
• I thought cheques already do that.
• The preprinted cheques that we normally use have
  our account number on them, but it is possible to
  have cheques that are not preprinted.we could
  write them out, have a counter cheque.
• And, what is the "statement" in (b)?
• This would be a recital of the transaction giving
  rise to the drawing of the chequee.g. pay Sam
  Martin for his diagrams.

20
Student Question 13

• Is s. 13(2) Cheques Act saying that it can still
  be a cheque even though it doesn't have the
  Financial Institution on the instrument but has
  the payee?
• No, s. 13(2) is saying that it can still be a
  cheque even if an extra person is specified on
  the instrument, in addition to the usual three
  parties (drawer, payee and Financial
  Institution). There may be someone else noted on
  there.an organisation that does not qualify as a
  financial institution or is not part of the
  payment system used by banks, but is involved.
  Some credit unions may be in this position.

21
Student Question 14

• I am attempting a past exam paper.September 2004
  Part A Question 3.
• In my answer I say that once a good becomes mixed
  with another good it loses its identity and the
  retention of title clause has no effect.
  Therefore the company supplying the jet
  propulsion unit has no claim on the goods.
• The conclusion is sound.
• The way you have stated is one way in which title
  to the propulsion unit would have passed.
  However, please remember that when something can
  be detached easily without damage, it may not
  have become part of the other goods in the real
  sense and so, sometimes title will not pass just
  because it is attached to other goods.
• Other relevant things in this question were.
• The Letter of Credit was probably payment, so
  title passed at that point anyway to MS.
• The retention of title clause would probably have
  been void as against the Liquidator in any case
  (and do not forget, you are asked to advise the
  Liquidator, in your answer!) because it would
  have been interpreted as a Charge (note the
  interest claimed in any completed boat), and was
  not registered. If it was a Canadian contract,
  there might have been other issues, but you were
  not expected to cover these. The Vienna
  convention does not address title.

22
Student Question 15

• Re September 2004 Part A Question 3 cont.
• I say that the bank has priority because it holds
  a registered charge over the good.
• Yes, that is probably correct. The charge has
  become fixed. In addition it would have a Bankers
  Liensee the part about the letter of credit in
  return for shipping documents (which would have
  included the Bill of Lading). Sometimes, a banks
  position may be subject to a lien in favour of
  the carrier if that arose prior to the charge
  becoming fixed, but as the unit has been unloaded
  and incorporated into the new boat, the carrier
  no longer has possession and would have given up
  its lien, unless affected by contract.

23
Student Question 16

• Re September 2004 Part A Question 3 cont.
• I am having trouble with working out what rights
  to compensation the company that contracts for
  the ship to be built has. Based on unjust
  enrichment, does the bank have to reimburse the
  company that has paid up until the last
  instalment?
• OM would probably just become an unsecured
  creditor. I doubt that from a legal point of view
  the bank would be seen as "unjustly" enriched. It
  is entitled to all assets of MS pursuant to its
  facilities and registered charge, regardless of
  whether the company or someone else has paid for
  them. OM could have protected itself in this
  situation by the agreement it entered into with
  MS acquiring an interest in the boat in progress,
  as it paid instalments. The situation would be
  different if there were plenty of assets subject
  to the charge for BB to satisfy itself in which
  case it may be forced to leave the boat alone.
  The Liquidator might have still had a superior
  claim to OM.
• It all depends on the contract OM has. On the
  facts given, OM probably does not have title to
  the boat in progress. See and apply Sale of Goods
  Act ss. 22-26. Something remained to be done to
  put the boat into a deliverable state (launch)
  and the instalment nature of the transaction
  reflected this.
• As a couple of different interpretations were
  possible, depending on assumptions made on the
  facts, provided you could justify any argument
  with relevant law, you would receive marks for
  whatever interpretation you adopted.

24
Student Question 17

• When will you be putting up the last 10 slides in
  Module 2? They still do not appear to be on the
  Web.
• The weekend school version of Module 2 has been
  given to LEC to put up on the Web.

25
Student Question 18

• Please give us a sample Q A covering Security
  Interests in Goods please?
• A sample theoretical question may be
• What are the formal requirements for the creation
  of a registrable Aquaculture Mortgage by a
  non-company Mortgagor? See Act for details.
• A problem question may be
• Sally decided to open a café in March 2006. She
  borrowed 50,000 to buy machines, appliances,
  fixtures and fittings from 123 Finance Limited at
  that time. She granted them a Bill of Sale over
  the assets of her business whereby she sold 123
  the assets for 50,000 but had the right to have
  them retransferred when she repaid the loan at
  the end of 2 years. The Solicitor for 123 Finance
  forgot to register the Bill of Sale. In July
  2006, Sally sold her business including all the
  assets to X Pty Limited, who had no notice of the
  Bill of Sale.
• 123 Finance Limited has asked you whether they
  are entitled to claim the assets from X pursuant
  to their Bill of Sale.
• Students would be expected to consider the
  ramifications of non-registration in this case
  (does not affect the validity of the instrument
  as it did under the old Bills of Sale law), the
  nemo dat rule, and exceptions. There is no
  question of insolvency or rights of a Liquidator
  to consider.