Commercial Law 25LAW1051: Property & Risk Case Study Analysis

This commercial law case study analyzes two scenarios involving Ben and Blooming Good Ltd., focusing on the transfer of property and risk under the Sale of Goods Act. The first scenario examines the purchase of fencing offcuts, exploring when property and risk transfer in relation to unascertained goods and the impact of a fire. It considers sections 16, 17, and 18 of the SGA, as well as relevant case law and the CISG. The second scenario involves the selection of glass water features, assessing when the goods become ascertained. The document discusses the legal implications for both parties in each scenario, determining who bears the loss and potential remedies. Desklib offers access to similar case studies and resources for students.

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Commercial law
Property and risk in transactions
Introduction
In commercial law it is usually easy to represent the notion of a contract and sale
agreement. The important thing is linking the definitions according to the way the UK
commercial law recognizes it. However, even in linking passing of property and risk is usually
complicated. The area has always been a subject for regulation in most legal system attracting
so many court cases. The legal structures have therefore developed and adopted different legal
structures and formations, social circumstances and legal backgrounds and theoretical analyses
regarding the passing of risk and property. This essay will therefore analyse the case study
involving Ben and the legal structures that will influence his decisions in respect to the property
and risk law.
1) Ben asks the salesman, Grant, if he can purchase the fencing offcuts that
are lying discarded in the corner of the warehouse. Grant agrees and states that the price
to pay will be determined by the length of the fencing with a price of £1 per meter. Grant
tells Ben that they will determine the length and notify him when it is ready for collection.
Property can pass from the seller to the buyer in many ways according to the
circumstances regulating the contract. In the instance of the above case study, the contract has
been passed by what is referred to as mere consent. Mere consent according to section 17 of
the contract goods and sales UK laws, is defined as, where the transfer of property takes place
upon conclusion of sale. In the case study circumstance, the agreement is to pass the property
after notification by the seller regarding the condition of the goods1.
1 Demeritt D, Rothstein H, Beaussier AL, Howard M. Mobilizing risk: explaining policy transfer
in food and occupational safety regulation in the UK.( Environment and Planning A. 2015)373-

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Previously cases which use durations to determine the pass of the property like the case
study use the contractual terms of both parties to determine transfer of property. Both parties are
allowed to have autonomous contractual terms. Article 6 of the United Nation Convention on the
Contract for international sale of goods (CISG) allows for different parties to argue their terms
before the contract is signed2. It is during such negotiations that the passing of risk can also be
negotiated. In agreement the article(6), makes it clear that contractual terms negotiated during
transfer of property override the rules of law regarding transfer of property.
The contractual terms may separate the moment of passing of property from the passing of
risk even though according to the law, it is one and the same thing. Such derogations from
existing transfer of property and risk laws can only be achieved through contractual terms.
Having determined that in the case study involving Ben there were no actual contractual
terms we therefore have to look at existing commercial laws that determine transfer of property
and risk. The law will help determine the legal cause that Ben should take or even legal
implications relevant to the case.
English law and the UK law use the jurisdiction of international law. It is therefore prudent
that we use the international commercial law in determining the course of the case.
To begin with, the most important provision emanates from section 16 of the SGA. The
section specifies that goods can only be transferred once they are ascertained. By ascertaining,
the SGA under section 16 provides that, the goods must have been identified by the buyer or
91.
2 Cain M. Fertility as an adjustment to risk. (In Gender and the Life Course 2018 Routledge.
) 167-182.

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agreed during the contractual time3. Additionally, goods can be ascertained if there are actions
undertaken after the contract was established. We can therefore conclude that according to
section 16 of the SGA law that the fencing offcuts needed by Ben are ascertained. They are
ascertained since they are already identified by the buyer and specifications agreed by the
seller. The intentions of transfer of property can be established further though sections 17 and
18. Section 17 introduces a twist by specifying that transfer of goods can not only be determined
by the goods being ascertained but there has to be an intention of the seller to in order to
transfer it4. Intention is therefore a key factor in determining transfer of goods especially after
ascertained goods have been correctly established. In court cases therefore intentions are
normally determined in three ways; the terms of the contract, conduct of the parties and
3 Hughes W, Champion R, Murdoch J. Construction contracts: law and management.
(Routledge; 2015). 122-126
.
4 Bridge MG. The international sale of goods. (Oxford University Press; 2017). 134-136
5.Cain M. Fertility as an adjustment to risk. Routledge. (InGender and the Life Course 2018).
167-182)
.

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circumstances of the case. In the case of B.R.KOteshwara Rao Vs G.Rameshwri Bai AIR 2004,
the judicial court applied section 18, rule 5 subsection 15. The court determined that intention
was achieved the moment the goods were brought into the contract.
In the contract between Ben and Grant, the goods are ascertained. The fences cut offs
are already determined and the only thing remaining is the payment regulation6. However the
agreement is silent as to when the goods will be transferred. In this case, where the contract is
silence, determination is brought about by intention. The intention of the seller, Grant who has
already agreed at the cost of the fencing goods, show ascertained goods and therefore
transfers.
However the fire accident introduces a twist to the case. Ben has not yet paid for the
property even though transfer of property and risk has already happened. It was during the
duration that payment was going to be established before being communicated officially by
Grant to him. Had Ben paid for the goods, he would have claimed damages caused by the
transfer but since he did not he therefore will not claim anything from the firm7.
In addition a second note can be introduced in arguing for the same case. The English
sales of good Act 1979 define contract on a different note. According to that ACT, a contract
5 Bridge M. Risk, property and bulk goods in international sales. Lloyd’s Maritime and
Commercial Law Quarterly. 2019. PP 223-227
6Bai J, Wei SJ. Property Rights and CDS Spreads: When Is There a Strong Transfer Risk from the Sovereigns to the
Corporates?. (Quarterly Journal of Finance):1750013.
7
? Bostic DL, Edwards PJ, Reed AJ, Scott MA, Shemesh K, inventors; Hartford Fire Insurance
Co, assignee. System to administer risk transfer and property salvage recovery. (United
States patent application US 14/745,923. 2016).224- 226.

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that transfer goods should not only have the agreement between the buyer and the seller but
there has to be an aspect of price8.
The property ownership can only be transferred or passed from the seller to the buyer in
exchange for the sum of money determined by the parties in the agreement. The property
remains the under the ownership of the buyer until it is paid for by the buyer. With the existence
of the price and the money the buyer is obligated to the contract just like the seller is.
The ACT of 1979 further determines that, the contractual agreement can only be
determined at the moment a consensual transaction is completed. Contract of sale is therefore
the first consideration in determining if property and risks have been transferred. The only
clause that throws away the transaction factor only includes loan, gift or bailment9. According to
Lord Benjamin who presided over the case of Stapylton Fletcher Ltd. VS In re Ellis and son LTD
(1994) 1 W.L.R 1181. The passing of property and risk is postponed until that time when the
fulfilment of this condition is achieved. The contract remains not a sale one until transactions is
done, even with an agreement to sale available.
For the case of Ben, there is consent and agreement to transfer property and risk.
However, the buyer, Ben has not completed transaction by paying for the goods, though they
have determined the cost for which the goods will cost. The title and the goods have therefore
not been transferred to Ben; they still remain property of the firm until they are paid for by Ben.
Even though the two parties have agreed the payment plan, the transfer of property and risk
contract has not yet been transferred. Ben, according to sales of goods act of 1979, cannot
claim damages caused by the fire since the fence offcuts are not his yet. The firm has therefore
8Arruñada B, Chang IY. The titling role of possession. (The Law and Economics of Possession.
2015):207-33.
9 Bryant RS, Call SM, Hakimi-boushehri D, Weekes JH, Criswell J, Binion T, Jordan II, Jackie
O, Mcdermeit E, Donovan J, inventors; STATE FARM MUTUAL AUTOMOBILE INSURANCE
COMPANY, assignee. Systems and methods for automatically mitigating risk of property
damage. United States patent application US 14/693,032. 2018 Oct 16.

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suffered loss from the fire but they do not owe Ben any losses caused by fire damage to the
fence off cuts.
In the other hand Ben can consider accusing the firm for breach of contract of possession
of property; this might not yield legal compensation to Ben. In breach of contract the English
courts seek to determine the circumstance that surrounds the breach of contract. At this point
the court considers the force of majeure and frustration of the contract of sale10. The force of
majeure is the impeding risks that lead to one party not achieving their side of the bargain. The
firm can only pay Ben if the damages caused are due to one party failing in its performance of
an important obligation. However, at times the contractual breech is caused by the unforeseen
circumstances beyond one party’s control. The court has to prove that the cause and the
impediment could not have been protected by the individual accused of breach of contract. The
case of fire outbreak that caused the breach of the contract between the two parties is beyond
the control of both. Ben can therefore not be compensated just as the breach of contract is
beyond the control of the firm.
Article 79 of the CISG states that , a party is not liable for a failure to perform any of his
obligations in the contract, if he can prove that the failure was due to an impediment that was
totally beyond his control. The ACT goes on to add that, the impediment could not be taken into
account at the time the contract of exchange of property was being done. In this case, not
anyone between Grant and Ben could determine that there could be a fire out-breaks. The
10 Gordon GW, Cowie J. Oil and Gas Law on the UKCS: Current Practice and Emerging
Trends in Contracting and Commercial Law. InUK Oil and Gas Law: Current Practice
and Emerging Trends: Volume 2: Commercial and Contract Law Issues 2018. (Edinburgh
University Press). 879-926
.

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consequences of the fire were therefore unforeseeable, protecting the consequences that it
might have caused the selling party.
Case study 2
Ben selects 5 glass water features from the store’s catalogue. Grant informs Ben
that they have plenty in their warehouse out back. Grant goes to the warehouse and
separates 5 of the water features and marks them up with Ben’s details.
Just like in the first case, it is important to determine if the goods had become ascertained.
The separation and identification of the glasses is sufficient for the goods to have become
ascertained. The labelling of the glasses with Bens detail in contrary with any intentions is
enough proof to show that the goods have been ascertained. According to the sale of goods
ACT section 23, the moment goods are separated for a specific customer from the main stock
even without labelling they are the owners goods, they have already been transferred11. This
case and ACT applies to the case study where Ben separates his bottles from the rest of the
stock. The labeling is a further detail of transfer of ownership. There is really no mention in the
case study as to whether Ben has made payments for the bottle. Lack of payment doesn’t
prevent ownership from transferring from the firm to Ben. Prevention can only be done with the
presence of a provision in the contract clause12. Since in the case study, there is lack of
retention of title clause, we can easily determine that the ownership of the bottles has been
transferred to Ben.
However, worth noting is that transfer of ownership does not automatically lead to transfer
of risk. While the entire law might have rendered transfer of goods to Mr Ben, the risk had not
11 Turner J. Intellectual Property and EU Competition Law, 2 u. (Oxford University Press,
Oxford; 2015).122-128
.
12Cummins J, Walden I, Cahill P. Knowledge Transfer in Commercial Law. InImpact: (The
Journal of Innovation Impact. 2016) 163.

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yet been transferred. The context at which risk is transferred to the buyer according to the sales
of goods ACT 1979 section 20 is at the point when the goods are ready for shipping from the
seller to the buyer’s destination13. In the context of the case study, ownership is transferred but
the risk is not yet transferred. It is for this reason that sellers invest in insurance services.
Insurance services will help solve the fire break out situation by paying the firm all the goods
and risk so that they compensate Ben. The same outcome is expected even when applying the
CISG law.
The sale and supply of goods to consumer regulations amended in 2002 under sections
17 and 18 have a different clause. They do hold that, the goods are transferred from the seller
to the buyer at the exact time in which the transfer is done14. That risk is transferred with
ownership and not possession15. This means that, at the point the bottles were separated from
the original stock and labelled with Bens details the risk and ownership were already
transferred, even though the possession remained with Grant and the firm. This will therefore
mean that the risk acquired by the firm through the fire will lead to Ben suffering the cost.
However with the insertion of sub-section (4) into section 20 the situation changes. The buyer
deals as a consumer therefore the two situations have to be ignored. The good remains at the
sellers risk until they are delivered to the buyer16. In the case study situation, therefore, the burnt
13 Twigg-Flesner C. Consumer product guarantees. (Routledge; 2017). 125-126
.
14 Howells G, Weatherill S. Consumer protection law. (Routledge; 2017). 879-926.
15 Means G. The modern corporation and private property (Routledge; 2017) 122-126
.
16 Oberman NG. Transfer of risk from seller to buyer in international commercial contracts: A
comparative analysis of risk allocation under the CISG, UCC and INCOTERMS. (Trabajo no
publicado. 2016).122-126.

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bottles had not been delivered to Mr Ben therefore the risk is on the side of Grant’s and his
firm’s fence. They therefore owe the buyer damage costs. Generally under the 1979 ACT17, if
the goods have passed the position in the common and commercial law so that the risk fall on
the buyer, he has to pay for all the damages caused. The buyer can therefore on the same note
claim compensation from the seller. However, in this case study, it is not clear whether the
buyer paid for the goods so that he asks for compensation18.
3) Ben selects 5 small Helenium plants and gives them to Grant to store with
his water features instead of taking them home with him the same day.
These Helenium plants are unascertained goods. Section 16 to section 20 introduces the
issue of a good not being part of the other rest. Just like in the Kursell case of 2001, a qualified
statement should describe all the goods that should be taken into possession of the buyer. In
the latter case, the timber that was described includes all trunks and branches of trees that did
not include seedlings. Since the seedlings weren’t included when the damage was done, even
though they were with the rest, they were not identified as goods for damage replacement.
According to clause 8A of the contract law the language should be framed and specified so that
it conforms to include all the properties19. The goods should sufficiently be identified at the point
where the contract is being made20.
17 Coetzee J. Incoterms and the lex mercatoria. (Direito. 2015) 12.
18 Whish R, Bailey D. Competition law. (Oxford University Press, USA; 2015) 201-204
19 Willett C. Fairness in consumer contracts: the case of unfair terms. (Routledge; 2016).
393-397
20Bocola L. The pass-through of sovereign risk. (Journal of Political Economy. 2016
1;1244):879-926.

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The Helenium have not been sufficiently identified at the time of making the contract and
therefore remain a property of the buyer, who is Mr.Ben. He gives them to Grant to watch over
them for a given duration.
The Helenium plants are not part of the rest of the goods for transfer according to the
statement. They are property of the buyer already. Being that they are not part of the goods to
be transferred for possession, section 17 of the 1979 Act has to be considered in determining
the intention of the inferred risk and damage. In this situation therefore the two important things
to consider just like in the case of Bowes & Co v Shand & Co [1874 80] All ER Rep 17421. The
court through judge Hannington had to determine the conditional appropriation. Conditional
appropriation emanates from the fact that the goods that are marked are not in any way related
to the contract. In that case, they are treated differently from the risks that the rest have
undergone22. Mr Ben intentions cannot be inferred. The degree of certainty is that the goods
would be picked like the rest of the goods are therefore irrevocable and out of the contract. The
presence and the fact that they are Helenium plants show that they are ear-marked and are out
of the silence contract.
On the second note, the court will seek to determine whether the second appropriation
was afforded the proper assent from the party to the contract23. The assent party in this case
study being Mr. Grant. There is no unconditional appropriation considering that the time of
21 Moyle JB. The contract of sale in the civil law. (Рипол Классик; 2017). 122-126
.
22Peel E. Treitel on the Law of Contract. London: Sweet & maxwell; 2015.
23Huang T, Lan L. On value re-creation and institutional innovation of the Labor contract law.
Science of Law (Journal of Northwest University of Political Science and Law 2016); 3:010.

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burning or fire, there wasn’t any assent from Mr. Grant24. He could not have approved fire to
burn the place.
In conclusion, the rules and the rights identified will help Ben determine if the rule of
transfer of risk and ownership has already happened.
Bibliography
Arruñada B, Chang IY. The titling role of possession. (The Law and Economics of Possession.
2015):207-33.
Bai J, Wei SJ. Property Rights and CDS Spreads: When Is There a Strong Transfer Risk from
the Sovereigns to the Corporates?. (Quarterly Journal of Finance):1750013.
Bocola L. The pass-through of sovereign risk. (Journal of Political Economy. 2016 1;1244):879-
926.
Bostic DL, Edwards PJ, Reed AJ, Scott MA, Shemesh K, inventors; Hartford Fire Insurance Co,
assignee. System to administer risk transfer and property salvage recovery. (United
States patent application US 14/745,923. 2016).224- 226
24 Lista A. International Commercial Sales: The Sale of Goods on Shipment Terms. (Informa
Law from Routledge; 2016). 879-926
.

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Bridge M. Risk, property and bulk goods in international sales. (Lloyd’s Maritime and
Commercial Law Quarterly. 2019). PP 223-227
Bridge MG. The international sale of goods. (Oxford University Press; 2017). 134-136
Cain M. Fertility as an adjustment to risk. Routledge. (InGender and the Life Course 2018) pp.
167-182.
Coetzee J. Incoterms and the lex mercatoria. (Direito. 2015) 12.
Cummins J, Walden I, Cahill P. Knowledge Transfer in Commercial Law. InImpact: (The Journal
of Innovation Impact. 2016) 163.
Demeritt D, Rothstein H, Beaussier AL, Howard M. Mobilizing risk: explaining policy transfer in
food and occupational safety regulation in the UK. (Environment and Planning A. 2015)
373-91.
Gordon GW, Cowie J. Oil and Gas Law on the UKCS: Current Practice and Emerging Trends in
Contracting and Commercial Law. InUK Oil and Gas Law: Current Practice and Emerging
Trends: Volume 2: Commercial and Contract Law Issues 2018. (Edinburgh University
Press). 879-926
Howells G, Weatherill S. Consumer protection law. (Routledge; 2017). 879-926
Huang T, Lan L. On value re-creation and institutional innovation of the Labor contract law.
Science of Law (Journal of Northwest University of Political Science and Law 2016);
3:010.
Hughes W, Champion R, Murdoch J. Construction contracts: law and management. (Routledge;
2015). 122-126
Lista A. International Commercial Sales: The Sale of Goods on Shipment Terms. (Informa Law
from Routledge; 2016). 879-926
Means G. The modern corporation and private property (Routledge; 2017) 122-126

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Moyle JB. The contract of sale in the civil law. (Рипол Классик; 2017). 122-126
Oberman NG. Transfer of risk from seller to buyer in international commercial contracts: A
comparative analysis of risk allocation under the CISG, UCC and INCOTERMS. (Trabajo
no publicado. 2016).122-126.
Peel E. Treitel on the Law of Contract. London: Sweet & maxwell; 2015.
Turner J. Intellectual Property and EU Competition Law, 2 u. (Oxford University Press, Oxford;
2015).122-128
Twigg-Flesner C. Consumer product guarantees. (Routledge; 2017). 125-126
Whish R, Bailey D. Competition law. (Oxford University Press, USA; 2015) 201-204
Willett C. Fairness in consumer contracts: the case of unfair terms. (Routledge; 2016). 393-397