Keenan and Riches’BUSINESS LAW

Chapter 10Contracts for the supply of goods and services

the goods, the seller can sue for non-acceptance. The
measure of damages is the estimated loss directly and
naturally resulting in the ordinary course of events from
the buyer’s breach of contract (s 50(2)). If the buyer
wrongfully refuses to accept and pay for the goods, the
seller is expected to mitigate his loss and sell them else-
where for the best possible price. Section 50(3) provides
guidance as to the measure of damages where there is an
available market for the goods. If the market price is less
than the contract price, the seller can recover the differ-
ence by way of damages. Where the market price is the
same or even higher than the contract price, the seller
will be entitled to nominal damages only. (The market
price is calculated at the time when the goods ought to
have been accepted.)
The following cases illustrate how s 50 is applied by
the courts.

has been paid. It is available in any of the following

circumstances:

■where the goods have been sold without any mention

of credit;

■where the goods have been sold on credit but the

period of credit has expired;

■where the buyer becomes insolvent.

The seller will lose his right of lien if the price is paid

or tendered or the buyer obtains possession of the goods.

The seller cannot exercise this right to retain the goods

if he has handed the goods to a carrier for transportation

to the buyer without reserving the right of disposal of

the goods or where he has given up the right.

2 Stoppage in transit (ss 44 – 46).This is the right of the

seller to stop goods in transit to the buyer, regain pos-

session of them and retain them until payment has been

received. The seller can exercise his right to stoppage in

transit in only one situation – where the buyer has

become insolvent.

3 Right of resale (ss 47 and 48).The rights of lien and

stoppage in transit by themselves do not give the seller

any right to resell the goods. He is allowed, however, to

resell the goods in the following circumstances:

■where the goods are of a perishable nature;

■where the seller gives notice to the buyer of his inten-

tion to resell and the buyer does not pay or tender the

price within a reasonable time;

■where the seller expressly reserves the right of resale

in the event of the buyer defaulting.

The seller can exercise the right of resale and also

recover damages for any loss sustained by the buyer’s

breach of contract. The original contract of sale is

rescinded and the new buyer acquires a good title to the

goods as against the original buyer.

Buyer’s remedies

Various remedies are available to the buyer where the seller

is in breach of contract. Since 31 March 2003 consumer

buyers have become entitled to a wider range of remed-

ies as a result of the changes brought about by the Sale

and Supply of Goods to Consumers Regulations 2002.

Rejection of the goods (ss 11 and 15A)

The buyer is entitled to repudiate the contract and reject

the goods where the seller is in breach of a condition of

319

W L Thompson Ltdv Robinson

(Gunmakers) Ltd(1955)

The defendants ordered a new Vanguard car from the

claimant car dealers, but then refused to accept it. The

defendants argued that they were only liable to pay

nominal damages, since the contract price and the mar-

ket price were the same. It was held that there was no

‘available market’ for Vanguard cars because supply

exceeded demand and, therefore, s 50(3) did not apply.

The dealers had sold one car less and under s 50(2) they

were entitled to their loss of profit on the sale.

Charterv Sullivan(1957)

A buyer refused to accept a new Hillman Minx car that

he had ordered from a dealer. In contrast to the previous

case, the demand for Hillman Minx cars exceeded sup-

ply and the dealer would have had no difficulty in finding

another buyer. It was held that the dealer was entitled to

nominal damages only. The buyer’s breach would not

have affected the total number of cars sold over a period

of time.

Real remedies

The unpaid seller has three possible remedies in respect
of the goods, even though the property in the goods has
passed to the buyer. They are lien, stoppage in transit
and resale.

1 Lien (ss 41– 43).A lien is the right to retain possession
of goods (but not to resell them) until the contract price