Sale of Goods: Buyers Contractual Remedies

Table of Contents
(1)
BUYERS CONTRACTUAL REMEDIES SALE OF GOODS ACT (SOGA)....................................................................2
1) BUYERS CONTRACTUAL REMEDIES:.................................................................................................................................... 2
2) NON-CONTRACTUAL REMEDIES: 2 types:.............................................................................................................................. 2
3) RELATIONSHIP BETWEEN REJECTION OF GOODS AND TERMINATION OF THE CONTRACT:........................................2
4) BUYERS RIGHT TO REJECT THE GOODS:.............................................................................................................................2
5) BUYERS ACCEPTANCE OF GOODS: Subject to limited consumer protection, all provisions below may be varied by
contracting parties.......................................................................................................................................................................... 3
6) BUYERS PARTIAL ACCEPTANCE/REJECTION OF THE GOODS:.........................................................................................4
7) 2 RESTRICTIONS ON BUYERS RIGHT TO REJECT IN COMMERCIAL CASES:..................................................................5
8) BUYERS RIGHT TO TERMINATE THE CONTRACT:................................................................................................................6
9) BUYERS CLAIM FOR DAMAGES FOR NON-DELIVERY:........................................................................................................7
10)
BUYERS CLAIM FOR DAMAGES FOR BREACH OF WARRANTY:...............................................................................9
11)
REDUCTION OF PURCHASE PRICE FOR BREACH OF WARRANTY:...........................................................................9
12)
SPECIFIC PERFORMANCE:............................................................................................................................................ 10
13)
RESTITUTION:.................................................................................................................................................................. 10
14)
CONSUMER PROTECTION:............................................................................................................................................ 10
(2)
BUYERS CONTRACTUAL REMEDIES CISG: www.cisg.law.pace.edu....................................................................11

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Sale of Goods: Buyers Contractual Remedies

(1) BUYERS CONTRACTUAL REMEDIES SALE OF GOODS ACT (SOGA)
1)

BUYERS CONTRACTUAL REMEDIES:

a) Rejection of the goods;
b) Termination of the contract;
c) Damages for non-delivery;
d) Damages for breach of warranty;
e) Reduction of purchase price for breach of warranty;
f) Specific performance in exceptional circumstances;
g) Rescission for misrepresentation, duress, undue influence, unconscionability, etc

2)

NON-CONTRACTUAL REMEDIES: 2 types:

a) Restitutionary remedy for return of purchase price provided (1) contract has been terminated and (2) there is total failure
of consideration.
b) May have tort law remedies: (1) deceit/negligence or statutory tort for fraudulent or negligent misrepresentation; (2) torts of
interference with property, if the property in the goods has passed to the Buyer.

3)

RELATIONSHIP BETWEEN REJECTION OF GOODS AND TERMINATION OF THE CONTRACT:

a) Distinguish between rejection and termination:
i) Rejection of goods and termination of contract are different remedies. Unfortunately, SOGA and case law do not
always clearly distinguish between the two.
ii) Generally the rights of a Buyer to reject and to terminate go hand in hand in a sale of goods contract i.e. both rights
arise on a breach of a condition or an innominate term with serious consequences. In the simple sale of goods
contract which is a one-off transaction, the Buyer who has the right to reject the goods for breach of condition can
also terminate the contract (assuming that the last contractual date of delivery is over).
iii) Generally, if the Buyer is only seeking damages, it does not matter whether he terminates the contract or not.
b) Rejection of the goods:
i) When the date of delivery has not arrived, rejection does not terminate contract.
ii) The right to reject is separate from the right to repudiate the contract. Circumstances giving rise to a right of rejection
do not necessarily terminate the contract even if the right of rejection is exercised. The Seller can usually tender a
conforming delivery until the time of performance has expired.
c) Termination of the contract:
i) Termination usually only has prospective effects on the contract but termination may have some retrospective
effect in the sale of goods context, e.g. termination revests title to the goods in the Seller if it has passed to the Buyer.
ii) The Buyers right to terminate a contract for breach of condition is qualified in a severable contract of sale (see
below).
iii) If the Buyer terminates the contract for breach, he can either sue for damages or claim restitution of the purchase
price (if already paid) if he can show total failure of consideration.
iv) Termination is an important remedy for the Buyer: (1) if the Seller has breached a condition and the market price has
fallen because the remedy of restitution of purchase price is available; (2) in cases of anticipatory breaches by the
Seller so that the Buyer can move on.
v) Termination is not the same as rescission ab initio for misrepresentation, etc. Buyer can still claim damages for
breach of contract after termination.

4)

BUYERS RIGHT TO REJECT THE GOODS:

a) Unless otherwise (expressly or impliedly) agreed, the Buyer has the right to reject goods for breach of a condition, and
probably for breach of an innominate term which deprives the Buyer of substantially the whole benefit he was intended to
have under the contract, but not for breach of a warranty.
b) Examples of conditions:
i) The Seller has title to the goods: s.12(1): In a contract of sale, other than one to which s.12(3) applies, there is an
implied condition on the part of the Seller that in the case of a sale he has a right to sell the goods, and in the case
of an agreement to sell he will have such a right at the time when the property is to pass.
ii) The goods match their description: s.13(1): Where there is a contract for the sale of goods by description, there is
an implied condition that the goods will correspond with the description.
iii) The goods are of satisfactory quality: s.14(2): Where the Seller sells goods in the course of a business, there is
an implied condition that the goods supplied under the contract are of satisfactory quality.
iv) The goods are fit for their purpose: s.14(4): An implied condition or warranty about quality or fitness for a
particular purpose may be annexed to a contract of sale by usage.
v) The bulk of the goods matches the sample quality:
(1) s.15(1): A contract of sale is a contract for sale by sample where there is an express or implied term to that
effect in the contract.
(2) s.15(2)(a): In the case of a contract for sale by sample, there is an implied condition (a) that the bulk will
correspond with the sample in quality
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Sale of Goods: Buyers Contractual Remedies

(3) s.15(2)(c): In the case of a contract for sale by sample, there is an implied condition (c) that the goods will be
free from any defect, making their quality unsatisfactory, which would not be apparent on reasonable examination
of the sample.
c)

5)

Consequences of (valid) rejection by the Buyer in simple one-off transaction case:

i) Buyer is no longer obliged to accept the goods unless Seller is able to tender fresh delivery within contractually
stipulated time.
ii) Buyers obligation to pay:
(1) Does not arise where the payment obligation is concurrent with the obligation to accept delivery.
(2) If the obligation to pay arose at a fixed time before the delivery, and the Buyer has paid, generally the Buyer can
terminate the contract and claim the return of the price for total failure of consideration.
(3) If the obligation to pay arose at a fixed time and has accrued before the Buyer rejects the goods and terminates
the contract, then the Buyer still has to pay unless the Buyer can argue that if paid the price could be claimed
back in restitution for total failure of consideration;
iii) Buyer is under no obligation to return rejected goods to the Seller: s .36: Unless otherwise agreed, where goods are
delivered to the Buyer, and he refuses to accept them, having the right to do so, he is not bound to return them to the
Seller, but it is sufficient if he intimates to the Seller that he refuses to accept them.
iv) Buyer remains entitled to common law damages for breach of contract (subject to the usual rules of expectation /
reliance measure and limitations of causation, remoteness, mitigation, etc).

BUYERS ACCEPTANCE OF GOODS: Subject to limited consumer protection, all provisions below may be varied by
contracting parties.
a) Technical meaning of Acceptance under SOGA:
i) Means waiver (in the sense of abandonment) of right to reject. Does not mean taking physical delivery.
ii) As a matter of law, Buyer cannot accept goods which the Seller has no title to sell
b) Loss of Right to Reject the Goods Because Buyer has Accepted the Goods:
i) In a non-severable contract, Buyer will lose his right to reject the goods and terminate the contract for breach of
condition once he has accepted the goods: s.11(3)
c) 3 mains ways Buyer is deemed to have accepted the goods:
i) Where Buyer intimates to the Seller that he has accepted the goods: s.35(1)(a)
ii) Where Buyer does an act inconsistent with the Sellers ownership of the goods after delivery: s.35(1)(b)
(1) There are uncertainties about the scope of s.35(1)(b). It covers cases where the Buyer destroys the goods or
mixes them with other goods in such a way that they cannot be returned to the Seller. Does not cover cases
where Buyer merely delivers goods to sub-Buyers (see s.35(6)(b) below).
iii) Where Buyer retains the goods beyond a reasonable time without intimating to the Seller that he has rejected them:
s.35(4)
iv) Example: Simplest form of acceptance is express or implied communication of acceptance to Seller. Clearest form of
acceptance is where Buyer expressly indicates (usually by signing a delivery note) he has accepted the goods.
v) Even if the Buyers right to reject is lost under s.35, the Sellers failure to remedy the relevant defects may constitute a
repudiation of contract by the Seller which the Buyer can accept and in addition seek damages for the losses
incurred.
d)

Consequences of Acceptance are generally:

i) Buyer loses (1) right to reject the goods accepted and (2) right to terminate the contract (but note concept of
conditional acceptance below)
ii) Obligation to pay for the goods accepted arises in the case of concurrent obligations to deliver and to pay
iii) If Buyer accepts more or less than the contracted quantity (where Buyer could have rejected the whole), Buyer has to
pay contract rates for quantities accepted
iv) Buyer remains entitled to damages for breaches of warranties (NB: conditions turn into warranties upon
acceptance). Alternatively, Buyer may cite breaches of warranties against the Seller to reduce the purchase price;
v) Buyer remains entitled to damages for other losses subject to usual rules and limitations.

e)

Buyer is not deemed to have accepted the goods:

i) Merely because he requests or agrees to have the goods repaired by the Seller: s.35(6)(a)
ii) Merely because he resells and re-delivers the goods to a sub-Buyer: s.35(6)(b)
iii) Where goods are delivered to Buyer and Buyer has not previously examined them, Buyer is not deemed to have
accepted the goods until Buyer has had a reasonable opportunity of examining them for the purpose of ascertaining
whether they are in conformity with the contract: s.35(2)(a)
iv) Where goods are delivered to Buyer and Buyer has not previously examined them, Buyer is not deemed to have
accepted the goods until Buyer has had a reasonable opportunity of examining them for the purpose of comparing the
bulk with the sample in the case of a contract for sale by sample: s.35(2)(b)
(1) Buyers right of examining goods: s.34: Unless otherwise agreed, when the Seller tenders delivery of the
goods to the Buyer, Seller is bound on request to afford the Buyer a reasonable opportunity of examining the
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Sale of Goods: Buyers Contractual Remedies

goods for the purpose of ascertaining whether they are in conformity with the contract and, in the case of a
contract for sale by sample, of comparing the bulk with the sample.
(2) A Buyer who deals as a consumer cannot lose his or her right to reject by agreement, waiver or otherwise until
Buyer has had a reasonable opportunity of examining them: s.35(3)
(3) Buyer is under no obligation to return rejected goods to the Seller: s .36: Unless otherwise agreed, where goods
are delivered to the Buyer, and Buyer refuses to accept them, having the right to do so, Buyer is not bound to
return them to the Seller, but it is sufficient if he intimates to the Seller that he refuses to accept them.
.
f)

Buyer is not required by mitigation rules to accept goods which are defective in quality:
i) Cf. Situation where goods are delivered late: Payzu Ltd v. Saunders [1919] 2 KB 581:
(1) Rule: (1) Plaintiff must take all reasonable steps to mitigate his loss consequent on the breach of contract; (2) A
Buyer of goods who is contractually entitled to obtain goods on credit acts unreasonably when he fails to accept
the defaulting party's offer to deliver goods for cash instead.
(2) Facts and holding: Buyer of goods (silk) who was contractually entitled to obtain goods at discounted price on
credit terms acted unreasonably and did not mitigate losses when he rejected defaulting party's offer to deliver
goods (late) at discounted price for cash instead and bought goods elsewhere at higher market price. Therefore,
Buyer could not claim damages for difference between contractually agreed discounted price and higher market
price actually paid elsewhere.

g)

Buyers Waiver & Estoppel and Acceptance:

i) s.11(1): Where a contract of sale is subject to a condition to be fulfilled by the Seller, the Buyer may waive the
condition, or may elect to treat the breach of the condition as a breach of warranty and not as a ground for treating the
contract as repudiated.
ii) Charles Rickards Ltd v Oppenhaim [1950] 1 KB 616 (CA Eng)
(1) Facts:
(a) D (Oppenheim defendant) purchased a Rolls Royce chassis from P (Rickards plaintiff). P contracted to
build a body to go on the chassis, the work to be completed by March 20th at the latest. It was not completed
by that date, but D continued to press for delivery. However, on June 29th, D wrote to the plaintiffs and said
that he would not take delivery after July 25th. P did not deliver by July 25th and D treated the contract as
repudiated.
(2) Held:
(a) D was entitled to do treat the contract as repudiated.
(b) Buyers waiver of right to reject the goods by acceptance: The original date of March 20th had been of
the essence of the contract, but D had waived it by his conduct. Since D led P to believe that D would not
insist on this stipulation as to time and that if P carried out the work, D would accept it, D will be estopped
from enforcing the stipulation as to March 20th against P. However, here, D had also given reasonable notice
of a new date, July 25th, as being of the essence of the contract.
(c) Buyers waiver of claim to damages by acceptance: It is also possible that a Buyer accepts the goods in
such a manner as to waive any claim for damages which he or she may have. A Buyer who actually
examines some specific item and finds it defective in some minor respects, but accepts it without demur,
may thus find that he or she has lost both the right to reject and the right to claim damages. However, the
right to claim damages is more fundamental and is less easily lost. A real waiver or circumstances giving rise
to a promissory estoppel may be necessary to deprive the Buyer of the right to claim damages where
defective goods are accepted by him.
iii) Course Outline Question: A contracts to sell widgets to B, to be delivered on Friday, time of delivery to be of the
essence. On Thursday, A calls B to say that delivery on Friday was not possible, and would it be alright if A delivers on
Saturday; B says OK. A delivers on Saturday: can B reject the goods for late delivery as breach of condition?

6)

BUYERS PARTIAL ACCEPTANCE/REJECTION OF THE GOODS:

a) Buyer can accept part of the goods, without losing the right to reject the rest: s.35A: Right of partial rejection
i) s.35A(1)(a)&(b): If the Buyer (a) has the right to reject the goods by reason of a breach on the part of the Seller that
affects some or all of them; but (b) accepts some of the goods, including, where there are any goods unaffected by
the breach, all such goods, he does not by accepting them lose his right to reject the rest.
ii) s.35A(2): In the case of a Buyer having the right to reject an instalment of goods, s.35A(1) applies as if references to
the goods were references to the goods comprised in the instalment.
iii) s.35A(3): For the purposes of s.35A(1), goods are affected by a breach if by reason of the breach they are not in
conformity with the contract.:
iv) s.35A(4): s.35A applies unless a contrary intention appears in, or is to be implied from, the contract.
b) s.35A applies whether the contract is severable or non-severable.
c) However, a Buyer cannot accept and reject different parts of a single commercial unit; in such a case the acceptance of
a part is acceptance of the whole: s.35(7): Where the contract is for sale of goods making one or more commercial units,
a Buyer accepting any goods included in a unit is deemed to have accepted all the goods making the unit; and
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Sale of Goods: Buyers Contractual Remedies

commercial unit means a unit division of which would materially impair the value of the goods or the character of the
unit.
7)

2 RESTRICTIONS ON BUYERS RIGHT TO REJECT IN COMMERCIAL CASES:

a) Restriction on Buyers right to reject based on quality of the goods:
i) Breaches to quality generally give rise to Buyers right to reject (see s.13, s.14, s.15) because they are breaches of
CONDITIONS on the premise of the condition-warranty approach.
ii) s.15A, however, prevents Buyer from rejecting goods in some situations:
(1) s.15A(1)(a)&(b): Where in the case of a contract of sale (a) the Buyer would, apart from s.15A(1) have the right
to reject goods by reason of a breach on the part of the Seller of a condition implied by section 13, 14 or 15;
but (b) the breach is so slight that it would be unreasonable for the Buyer to reject them, then, if the Buyer does
not deal as consumer, the breach is not to be treated as a breach of condition but may be treated as a breach of
warranty.
(2) s.15A(2): s.15A applies unless a contrary intention appears in, or is to be implied from, the contract.
(3) s.15A(3): It is for the Seller to show that a breach fell within s.15A(1)(b)
(4) [NB: s.15A restriction recognises that there might be injustice if innocent party is allowed to terminate contract for
trivial breaches. Parliament has conceded that the automatic right to reject for breach of condition does not
always achieve a just result. Contracts are made to be performed and, particularly in the case of some
international sales contracts, to allow avoidance after expensive shipment would be wasteful of resources.
Designed to counter over-technical termination by commercial Buyers based on Sellers breaches of implied
conditions. Treitel: the section undermines the certainty which classification of implied terms in question as
conditions was intended to provide]
iii)

s.15A only applies in the following situations:

(1) Buyer must not be a consumer. Consumer: s.61(4A): References in this Act to dealing as consumer are to
be construed in accordance with Part I of the Unfair Contract Terms Act.
(a) s.12 UCTA: Dealing as consumer:
(i) s.12(1)(a)&(b)&(c) UCTA: A party to a contract deals as consumer in relation to another party if (a) he
neither makes the contract in the course of a business nor holds himself out as doing so; (b) the other
party does make the contract in the course of a business; and (c) in the case of a contract governed by
the law of sale of goods or hire-purchase, or by section 7, the goods passing under or in pursuance of
the contract are of a type ordinarily supplied for private use or consumption.
(ii) s.12(2): But on a sale by auction or by competitive tender the Buyer is not in any circumstances to be
regarded as dealing as consumer.
(iii) s.12(3): Subject to this, it is for those claiming that a party does not deal as consumer to show that he
does not.
(b) Consumers are exempted from this restriction because they are in a weaker bargaining position. E.g. see s.6
and s.3 UCTA
(2) Buyers right of rejection must arise from Sellers breach of conditions implied under s.13, s.14, or s.15
SOGA (see s.15A(1)(a))
(a) s.15A does not apply for breach is of express conditions in the contract because of right to repudiate.
(b) Effect of late delivery of goods depends on s,10(2) Whether any other stipulation as to time is or is not of
the essence of the contract depends on the terms of the contract. If time of delivery made of the essence,
common law tradition gives rise to right to repudiate.
(3) Breach must be so slight that it would be unreasonable for Buyer to reject the goods (s.15A(1)(b)):
(a) Burden on Seller to show that breach is so slight it would be unreasonable for Buyer to reject the goods.
(b) Objective inquiry, no need to prove subjective bad faith on Buyers part. 2 fold test in s.15A(1)(b): (a) Was
the breach of condition in fact so slight that (b) It would be unreasonable for the Buyer to reject.
(c) Different from principle of de minimis non curat lex ("The law does not concern itself with trifles")
(4) If s.15A applies, the breach may be treated as a breach of warranty.
(a) NB: SOGA only contains condition and warranty. Any innominate term is a warranty.
(b) Is s.15A consistent with the judicial approach in contract law in Singapore towards breaches of condition as
seen in RDC Concrete and Man Financial?
(5) Where exact specifications are given and held to be part of the contract description, there is little scope for the
maxim de minimis non curat lex ("The law does not concern itself with trifles") to apply respect of deviation from
description:
(a) Arcos Ltd v E A Ronassen & Son [1933] 1 AC 470 (HL):
(i) Facts:
1. Wooden staves were sold for the disclosed purpose of being used by the Buyer to make cement
barrels and were to be one half0inch thick. Only 5% complied with this specification, although none
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Sale of Goods: Buyers Contractual Remedies

of the others exceeded the measurement by more than one sixteenth of an inch. It was found as a
fact that the goods were commercially within the contract specification, merchantable under the
contract specification and reasonably fit for the purpose for which they were sold.
(ii) Held:
1. Seller did not comply with the condition implied in s.13 (sale by description) and was liable.
(iii) Treitel: comments that the difference between half an inch and 9/16ths is not necessarily slight as
required by s.15A. If so, the second issue of reasonableness does not arise for consideration. If Trietel
is correct, the Buyer could still justifiably terminate the contract, even after enactment of s.15A.
b)

Restriction on Buyers right to reject based on quantity of the goods:

i) General rule: Buyer has the right to reject all the goods if the wrong quantity is delivered, subject to any acceptance:
s.30(1) and s.30(2)
(1) s.30(1): Where the Seller delivers to the Buyer a quantity of goods less than he contracted to sell, the Buyer
may reject them, but if the Buyer accepts the goods so delivered, he must pay for them at the contract rate.
(2) s.30(2): Where the Seller delivers to the Buyer a quantity of goods larger than he contracted to sell, the Buyer
may accept the goods included in the contract and reject the rest, or he may reject the whole.
ii)

8)

s.30(2A): restricts the general rule if Buyer is not a consumer.

(1) s.30(2A)(a): A Buyer who does not deal as consumer may not (a) where the Seller delivers a quantity of goods
less than he contracted to sell, reject the goods under s.30(1) if the shortfall is so slight that it would be
unreasonable for the Buyer to do so.
(2) s.30(2A)(b): A Buyer who does not deal as consumer may not (b) where the Seller delivers a quantity of goods
larger than he contracted to sell, reject the whole under s.30(2) if the excess is so slight that it would be
unreasonable for the Buyer to do so.

BUYERS RIGHT TO TERMINATE THE CONTRACT:

a) Innocent party generally cannot affirm a contract (where he has a right to terminate), unless he knows of the facts giving
rise to his right to terminate. However, innocent party can accept the goods without knowledge of the facts giving rise to
his right to reject the goods. In theory, the right to terminate the contract can survive the right to reject the goods.
b)

Loss of Buyers right to terminate contract and right to reject goods:

i) Non-Severable (Non-Instalment Delivery) Contracts:
(1) s.11(3): Subject to s.35A, where a contract of sale is not severable and the Buyer has accepted the goods or
part of them, the breach of a condition to be fulfilled by the Seller can only be treated as a breach of warranty,
and not as a ground for rejecting the goods and treating the contract as repudiated, unless there is an express or
implied term of the contract to that effect.
(a) NB: If s.11(3) applies, Buyer loses the right to reject those goods and the right to terminate the contract
for a breach of condition in respect of accepted goods because the breach of condition turns into a breach of
warranty.
(b) The phrase Subject to 35A (right to partial rejection) was added in 1996 so that s.11(3) would not affect
Buyers general right to accept part of the goods while rejecting others.
(c) The effect of s.11(3) on the right of the Buyer to terminate the contract is uncertain. Read literally, once the
Buyer has accepted part of the goods, he loses the right to terminate (this is not affected by s 35A which
says nothing about termination).
(i) However, it is possible that the Buyers acceptance of the part is conditional upon no further breaches
of conditions in respect of the rest of the goods (especially if they are to be delivered at a later time),
so that s.11(3) is not applicable until the Buyer has received all the goods and can decide whether to
accept them (or part thereof) unconditionally. In this case, before any unconditional acceptance takes
place, the Buyer can choose to reject all the goods and terminate the contract, or accept part of the
goods and lose his right to termination.
(ii) s.11(3) does not say anything about the breach of an innominate term with serious consequences. What
is the consequence of acceptance in such a case?
(iii) s.11(3) does not apply to severable contracts.
ii)

Severable (Instalment Delivery) Contracts:

(1) Instalment (severable) contracts are governed by s.31: Instalment deliveries
(a) Buyer not bound to accept delivery of goods by instalments unless this is agreed in the contract: s.31(1)
(b) s.31(2): Where there is a contract for the sale of goods to be delivered by stated instalments, which are to
be separately paid for, and the Seller makes defective deliveries in respect of one or more instalments, or
the Buyer neglects or refuses to take delivery of or pay for one or more instalments, it is a question in each
case depending on the terms of the contract and the circumstances of the case whether the breach of
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contract is a repudiation of the whole contract or whether it is a severable breach giving rise to a claim for
compensation but not to a right to treat the whole contract as repudiated.
(2) Course outline questions:
(a) (1) When does the right to terminate an instalment contract arise? (2) Why must special provision be made
for the right to terminate instalment contracts? (3) What happens to goods accepted in previous instalments
upon termination?
(i) The right to reject a batch of the instalment still remains, but the right to termination does not
automatically arise. It will only arise upon (a) the ratio quantitatively which the breach bears to the
contract as whole, and (b) the degree of probability or improbability that such a breach will be repeated.
If it is essentially a one-off thing, one should not be allowed to call off the whole transaction. However,
where the breach is substantial and continued persistently, termination arises
(3) Course outline question: A contracts to sell B 240 widgets, 10 to be delivered each month for two years. B is
required to pay $100 for every widget delivered. The widgets in the first instalment are accepted, but in the
second instalment 3 widgets are of unsatisfactory quality in breach of condition. What is Bs legal position?
(4) See Regent OHG Aisenstadt und Barig v Francesco of Jermyn Street Ltd [1981] 3 All ER 327.
(a) Facts:
(i) R agreed to manufacture 62 suits and 48 jackets for F. Delivery was by instalments as and when
required by F. F wanted to cancel the order but R would not allow that because the suits were already in
production. One delivery was one suit short. F therefore tried to take advantage of this to cancel the
remainder of the contract relying on the provisions of s.30(1) in relation to delivery of the wrong quantity.
(b) Held:
(i) In instalment sales, s.31(2) overrides s.30(1) and the breach was not serious enough to go to justify Fs
repudiation.

9)

BUYERS CLAIM FOR DAMAGES FOR NON-DELIVERY:

a) s.51: Damages for non-delivery
i) s.51(1): Where the Seller wrongfully neglects or refuses to deliver the goods to the Buyer, the Buyer may maintain
an action against the Seller for damages for non-delivery.
(1) Does s.51(1) apply if Seller acted in good faith and with best efforts but yet failed to deliver to the goods? Seems
non-delivery is a strict offence, although s.51(1) seems to provide that it must be wrongfully neglect. Simply, if
there is non-delivery, then damages are to be awarded to the Buyer. Only frustration will excuse liability.
(2) SOGA provisions for damages for Sellers non-delivery are based on the same principles as damages for
Buyers non-acceptance.
b)

Remoteness of Damages:
i) s.51(2) (first limb of Hadley v Baxendale): The measure of damages is the estimated loss directly and naturally
resulting, in the ordinary course of events, from the Sellers breach of contract.
ii) s.54 (second limb of Hadley v Baxendale): Nothing in this Act affects the right of the Buyer or the Seller to
recover interest or special damages in any case where by law interest or special damages may be recoverable, or to
recover money paid where the consideration for the payment of it has failed.
iii) Course outline question: Does The Achilleas have any effect on the measure of recoverable damages? Answer:
Issue is whether the defendant assumed the risk. The Achilleas can be argued to be about the agreement of the
parties. Basically the same problem as we have as the common law. Can use s.62(2) which allows us to apply what is
in the common law which does not contradict what the SOGA says: The rules of the common law, including the law
merchant, except in so far as they are inconsistent with the provisions of this Act, and in particular the rules relating to
the law of principal and agent and the effect of fraud, misrepresentation, duress or coercion, mistake, or other
invalidating cause, apply to contracts for the sale of goods.

c)

Quantification of Damages:
i) s.51(3): Where there is an available market for the goods in question, the measure of damages is prima facie to be
ascertained by the difference between the contract price and the market or current price of the goods at the time or
times when they ought to have been delivered or (if no time was fixed) at the time of the refusal to deliver.
ii)

iii)

Generally, any intended resale by the Buyer of the goods at a price higher or lower than the market price and resulting
lost sales are irrelevant to the assessment of damages which is still calculated as the difference between the market
price at the date of due delivery and the contract price. Lost profits may only be recovered In exceptional
circumstances.
General rule is that sub-sales are not relevant to the calculation of damages. The fact that the Seller is aware or ought
to have been aware of the sub-sales does not displace the market price rule, as the Buyer can be expected to go into
the market to buy the replacement goods. Mere knowledge or possibility that the Buyer being a trader will probably resell the goods is not sufficient to displace the market price rule: The Arpad [1934] P 189, CA (Eng).
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Sale of Goods: Buyers Contractual Remedies

iv) Exceptions to the market price rule in s.51(3):
(1) Exception 1: Special damages (for example, loss of profits due to lost sub-sales) may be claimed in addition to
damages recoverable under the market price rule: s.54. Recovery of profits on lost sub-sales appears possible
only under special circumstances such as: (1) the sale from Seller to Buyer was of specific goods; (2) the
intended resale by the Buyer was for the same specific goods; and (3) Seller knew or ought reasonably to have
known of the resale at or prior to the contract of sale: Re R and H Hall Ltd and W H Pim (Junior) & Co's
Arbitration (1928) 139 LT 50, HL
(a) Example: Buyer originally contracts for $10 but Seller fails to deliver. Buyer buys same goods at market price
of $11 and resells for $12. Profit is $1 less per item. Buyer: (1) claims for $1 for natural damages under
s.51(2), and (2) claims $1 for special damages under s.54)
(b) In order for the Seller to be liable for the profits on the sub-sale, the Seller must know or ought reasonably to
know that the identical goods sold are to be resold to a third party under a special contract which cannot be
satisfied by the Buyer procuring alternate similar goods in the market: Aryeh v Lawrence Kostoris & Sons
Ltd [1967] 1 Lloyd's Rep 63 at 68, CA (Eng)
(2) Exception 2: Where there is no available market for the goods, the market price rule is inapplicable. The
measure of damages depends on whether the Buyer intends to purchase the goods for use or for re-sale. Where
the goods were intended for re-sale, the Buyer should be entitled to recover the loss of profits ie the difference
between the value of the goods and the contract price: J Leavey & Co Ltd v George H Hirst & Co Ltd [1944] 1
KB 24 CA (Eng)
(a) If there is no market and the Buyer actually buys substitute goods to perform his contracts with the subBuyer, he may prima facie recover excess cost arising from the purchase of better quality goods than that of
the contract goods: Hinde v Liddell (1875) LR 10 QB 265
d)

Date on which to apply market price rule:

i) No anticipatory repudiatory breach:
(1) The market price is taken at the time of due delivery or when the delivery ought to have been made (i.e. the date
of the breach.
(a) Time of Due Delivery: Where there is a fixed time for delivery, the market price is that at the fixed delivery
date. When a time period is agreed for delivery, the date is the last day of the period; this is the day on which
the goods ought to have been delivered.
ii) Anticipatory Repudiatory Breach:
(1) When Seller indicates he does not intend or is unable to deliver the goods at a later date, Buyer has 2 choices:
(a) Buyer can choose to accept the repudiation and treated the contract as discharged, in which case, his duty
to mitigate commences. OR
(b) Buyer can choose not to accept the repudiation, in which case he postpones his duty to mitigate until the due
date of delivery.
(2) The market price at the date of repudiation or acceptance of repudiation is not relevant. The applicable market
price is at the date of due delivery. Where no delivery time is fixed, the reference to 'the time of the refusal to
deliver' under s.51(3) is inapplicable to anticipatory breach. Instead, the relevant time is that when delivery might
have been expected to be made.
(a) Tai Hing Cotton Mill Ltd v Kamsing Knitting Factory [1979] AC 91 PC (Sellers repudiated a contract to
deliver yarn without a fixed delivery date, and the Buyers did not accept the repudiation at first but eventually
after four months of the repudiation, sued for damages. HELD: The Buyer would have been entitled to
demand delivery of the goods on reasonable notice up to the date of the issue of the writ. Accordingly, the
due date of delivery would have been a month (being reasonable notice) from the issue of the writ. The
market price for the purpose of s.51(3) would have been that at such due date of delivery. The reference to
at the time of the refusal to accept under s.51(3) was not applicable.)

10) BUYERS CLAIM FOR DAMAGES FOR BREACH OF WARRANTY:

a) Damages for (1) non-delivery and (2) damages for breaches of warranty are alternative. Acceptance of goods amounts to
waiver of a condition in a non-severable contract (i.e. condition becomes warranty) BUT does not amount to waiver of
damages for breaches of warranty: s.11(3)
b) Late Delivery of Goods: 2 Situations :
i) May amount to a breach of a condition.
ii) May not be important enough and therefore qualifies only as a warranty.
c) Damages for Breach of Warranty from Late Delivery of Goods:
i) Buyer must mitigate by accepting the late delivery of the goods:
ii) Damages depend on whether Buyer is buying for resale or whether Buyer is buying for use:
(1) Buyer buying for Use: Damages may include loss of use, and of income (which would have been derived from
the use of the goods), and expenditure incurred in the obtaining the use of substitute goods for the period of the
delay. This is subject to the rules on remoteness of damages (s.54).
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Sale of Goods: Buyers Contractual Remedies

(2) Buyer buying for Resale: Damages generally measured as the excess of market price of the goods on the due
delivery date over that on the actual delivery date. Resale price itself is not to be taken into account in the
computation of the damages.
(a) The resale price itself is not to be taken into account in the computation of the damages: Slater v Hoyle &
Smith Ltd [1920] 2 KB 11, CA (Eng). Rule is based on the assumption that the Buyer resells the goods as
soon as they are delivered to him. Therefore, on this assumption, the loss to the Buyer which is caused by
the delay is the fall in the market between the contract delivery date and the actual delivery date.
(b) Cf. Wertheim v Chicoutimi Pulp Co Ltd [1911] AC 301:
(i) Facts:
1. A contracted to sell goods to B at 25 shillings a ton. With the costs and expenses of transport, the
total cost to the Buyer was 38 shillings a ton. A was late in delivering the goods. The market price at
the date when the goods ought to have been delivered was 70 shillings a ton, but the market price
at the date when the goods were in fact delivered was 42 shillings and sixpence a ton. The Buyer
however, resold the goods at 65 shillings a ton.
(ii) Held:
1. Awarded damages based on excess of the market price on due delivery date over the resale price
of the goods as the resale price was higher than the market price on the day of actual delivery.
(iii) This case has been criticised by many writers; and also in Slater v Hoyle & Smith Ltd [1920]
d)

Damages for breaches of warranties of quality: s 53(3): In the case of breach of warranty of quality, such loss is prima
facie the difference between the value of the goods at the time of delivery to the Buyer and the value they would have had
if they had fulfilled the warranty.
i) Generally it is the diminution in value, as compared to the cost of cure, which should be used to measure damages

11) REDUCTION OF PURCHASE PRICE FOR BREACH OF WARRANTY:

a) Where the Buyer cannot or does not reject the goods, Buyer may set up against the Seller the breach of warranty to
reduce or extinguish the price of the goods: s.53(1):
i) s.53(1)(a): Where there is a breach of warranty by the Seller, or where the Buyer elects (or is compelled) to treat any
breach of a condition on the part of the Seller as a breach of warranty, the Buyer is not by reason only of such breach
of warranty entitled to reject the goods; but he may (a) set up against the Seller the breach of warranty in diminution
or extinction of the price; or
ii) s.53(1)(b): Where there is a breach of warranty by the Seller, or where the Buyer elects (or is compelled) to treat any
breach of a condition on the part of the Seller as a breach of warranty, the Buyer is not by reason only of such breach
of warranty entitled to reject the goods; but he may (b) maintain an action against the Seller for damages for the
breach of warranty.
b) s.53(1)(a) remedy is alternative to an action for damages for breach of warranty.

12) SPECIFIC PERFORMANCE:

a) s.52: Where the contract is one for the delivery of specific or ascertained goods, a court has the discretion under s.52 to
direct that the Seller must perform the contract specifically. Whether specific performance will actually be awarded in such
contracts will depend on the general principles under which the remedy is available at common law.
b)

Property in goods has not passed to Buyer:

i) Where property has not passed to the Buyer and the Seller refuses to deliver, the Buyers only means to get the
actual goods is to ask the court to grant specific performance of the contract. This statutory jurisdiction is generally
exercised on the same principles as the equitable jurisdiction; the most important factor is that damages must be
inadequate.
ii) Generally, courts have been reluctant to grant specific performance in sale of goods cases. Most parties to sale of
goods contracts are commercial parties who will be content with monetary compensation (at least in the view of the
courts).
iii) If the Buyer is prima facie entitled to specific performance of the obligation to deliver, a question is whether the
remedy might be denied on the basis of lack of mutuality, i.e. that the Seller could not have obtained specific
performance of the obligation to accept (see Sellers Remedies).

c)

Property in goods has passed to Buyer:

i) If property in the goods has already passed to the Buyer, then the Buyer may enforce his property rights by:
(1) Suing for the equitable relief of specific restitution (i.e. order to return the property to the owner). Also
discretionary remedy and given in exceptional cases. OR
(2) In tort for damages for interference with property rights.
(3) s.52
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Sale of Goods: Buyers Contractual Remedies

d)

Unclear whether Buyer can claim specific performance in respect of an accrued obligation to deliver if the Buyer has
terminated the contract. In any event, in one-off transactions, the Buyers intention in termination is to have nothing more
to do with the transaction; the Buyer will not get an order for specific performance unless he is ready and willing to perform
his part of the bargain. Compare the Sellers position in an action for agreed price.

13) RESTITUTION:
a) If the contract is terminated, the Buyer (whether the innocent or defaulting party) has an important remedy in restitution:
i) Buyer can claim for the return of purchase price for total failure of consideration (subject to the termination of the
contract and rules on deposits). If contract is severable, there may be total failure of consideration in respect of each
severable portion of the contract for the purpose of this rule.

14) CONSUMER PROTECTION:

a) Consumer Buyers may get additional protection under the Consumer Protection (Fair Trading) Act. Practically all the
remedies under SOGA are also available under the CPFTA but on a discretionary basis. A notable remedy in CPFTA not
found in SOGA is an order to the supplier/Seller to repair or supply parts for the goods
i) s.7(4)(d): Without prejudice to any other powers of the court to grant relief, a court (other than a Small Claims
Tribunal) may in any proceedings where the court finds that a supplier has engaged in an unfair practice make an
order directing the supplier to repair goods or provide parts for goods

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Sale of Goods: Buyers Contractual Remedies

(2) BUYERS CONTRACTUAL REMEDIES CISG: www.cisg.law.pace.edu
1)

PERFORMANCE:
a) Article 46(1) provides that the Buyer may require performance, i.e. Buyer is presumptively entitled to ask for specific
performance.
i) Article 46 must be read together with Article 28 which states that a court will not be required to issue a decree of
specific performance if that remedy would not normally be available in similar circumstances under domestic law.
ii) Article 28 does not prohibit a common law court from issuing a decree of specific performance pursuant to Article
46; it merely relieves the court from the obligation to do so.
iii)

Article 46(1): The Buyer may require performance by the Seller of his obligations unless the Buyer has resorted to a
remedy which is inconsistent with this requirement.
iv) Article46(2): If the goods do not conform with the contract, the Buyer may require delivery of substitute goods only if
the lack of conformity constitutes a fundamental breach of contract and a request for substitute goods is made either
in conjunction with notice given under article 39 or within a reasonable time thereafter.
v) Article 46(3): If the goods do not conform with the contract, the Buyer may require the Seller to remedy the lack of
conformity by repair, unless this is unreasonable having regard to all the circumstances. A request for repair must be
made either in conjunction with notice given under article 39 or within a reasonable time thereafter.
vi) Article 28: If, in accordance with the provisions of this Convention, one party is entitled to require performance of
any obligation by the other party, a court is not bound to enter a judgement for specific performance unless the court
would do so under its own law in respect of similar contracts of sale not governed by this Convention.
b)

Article 46(2) allows Buyer to require delivery of substituted goods if the delivered goods are non-conforming but only if the
non-conformity amounts to a fundamental breach as defined by Article 25 and only if Buyer has given Seller the notice
required by Article 39. Essentially, Seller is entitled to notice and an opportunity to cure before Buyer (1) employs the
remedial right to demand substituted goods; or (2) pursuant to Article 46(3) to demand repair of the non-conforming
goods. The same references to Articles 25 and Article 39 apply to Buyers rights to demand repair under Article 46(3).
i)

ii)

iii)

c)

2)

Article 25: A breach of contract committed by one of the parties is fundamental if it results in such detriment to the
other party as substantially to deprive him of what he is entitled to expect under the contract, unless the party in
breach did not foresee and a reasonable person of the same kind in the same circumstances would not have
foreseen such a result.
Article 39(1): The Buyer loses the right to rely on a lack of conformity of the goods if he does not give notice to the
Seller specifying the nature of the lack of conformity within a reasonable time after he has discovered it or ought to
have discovered it.
Article 39(2): In any event, the Buyer loses the right to rely on a lack of conformity of the goods if he does not give
the Seller notice thereof at the latest within a period of two years from the date on which the goods were actually
handed over to the Buyer, unless this time-limit is inconsistent with a contractual period of guarantee.

Query: What is the difference, if any, between a demand for specific performance pursuant to Article 46(1) and a demand
for either substituted goods pursuant to Article 46(2) or repair to non-conforming goods pursuant to Article 46(3)?

DELAY AND ADDITIONAL TIME:

a) Buyer can choose to give Seller more time to perform if there is a delay in delivery. No consideration is necessary. Buyer
can unilaterally grant additional time without relinquishing any right to damages or other remedies should Seller continue
to be delinquent beyond the additional time granted.
i) Article 47(1): The Buyer may fix an additional period of time of reasonable length for performance by the Seller of
his obligations.
b)

c)

d)

During the additional time allowed, Buyer cannot pursue any other remedies unless Seller clearly indicates an intention
not to perform: Article 47(2) Unless the Buyer has received notice from the Seller that he will not perform within the
period so fixed, the Buyer may not, during that period, resort to any remedy for breach of contract. However, the Buyer is
not deprived thereby of any right he may have to claim damages for delay in performance.
NB: Buyer is under no obligation to grant additional time. It is simply an option available to Buyer to encourage Seller to
perform without Buyer losing any rights under the contract, and, if Seller refuses to take advantage of the additional time
to cure the delinquency. Buyer may pursue all remedies available to Buyer under the CISG.
Seller has concomitant right to request an opportunity to repair a non-conforming tender or to be allowed additional time to
perform and to ask Buyer to accept the request. If Buyer agrees, Buyers agreement does not affect Buyers right to claim
damages. Seller must cover any expenses of the additional time or repairs: Article 48
i) Article 48(1): Subject to Article 49, the Seller may, even after the date for delivery, remedy at his own expense any
failure to perform his obligations, if he can do so without unreasonable delay and without causing the Buyer
unreasonable inconvenience or uncertainty of reimbursement by the Seller of expenses advanced by the Buyer.
However, the Buyer retains any right to claim damages as provided for in this Convention.
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Sale of Goods: Buyers Contractual Remedies

ii)

Article48(2): If the Seller requests the Buyer to make known whether he will accept performance and the Buyer does
not comply with the request within a reasonable time, the Seller may perform within the time indicated in his request.
The Buyer may not, during that period of time, resort to any remedy which is inconsistent with performance by the
Seller.
iii) Article 48(3): A notice by the Seller that he will perform within a specified period of time is assumed to include a
request, under the preceding paragraph, that the Buyer make known his decision.
iv) Article 48(4): A request or notice by the Seller under paragraph (2) or (3) of this article is not effective unless
received by the Buyer.
e)

3)

Note that Article 47 and Article 48 provide Buyer and Seller with chances for cooling off and time to cure a defect or
delay. If used properly, the articles may avoid the necessity for litigation.

AVOIDANCE:
a) Buyer has the right to declare a contract avoided and to be freed from further obligations if: (Article 49(1))
i) Sellers failure (delivery of non-conforming goods, late delivery, etc.) amounts to a fundamental breach under Article
25 or
ii) Seller has been given additional time to deliver and Seller fails to deliver within the additional time granted.
(1) Article 49(1)(a): The Buyer may declare the contract avoided (a) if the failure by the Seller to perform any of his
obligations under the contract or this Convention amounts to a fundamental breach of contract; or
(2) Article 49(1)(b): The Buyer may declare the contract avoided (b) in case of non-delivery, if the Seller does not
deliver the goods within the additional period of time fixed by the Buyer in accordance with paragraph (1) of
Article 47 or declares that he will not deliver within the period so fixed.
b)

If Seller delivers goods, Buyer loses the right to declare the contract avoided, even for non-conforming delivery, if ((Article
49(2)):
i) Buyer has not provided the requisite notice under Article 39 in a timely fashion (e.g. for substituted goods or repair to
delivered goods) or
ii) Buyer has not given notice within a reasonable time after learning of the breach or after the time at which a
reasonable person should have known of the breach.
(1) Article 49(2): However, in cases where the Seller has delivered the goods, the Buyer loses the right to declare
the contract avoided unless he does so:
(a) (a) in respect of late delivery, within a reasonable time after he has become aware that delivery has been
made;
(b) (b) in respect of any breach other than late delivery, within a reasonable time:
(i) (i) after he knew or ought to have known of the breach;
(ii) (ii) after the expiration of any additional period of time fixed by the Buyer in accordance with paragraph
(1) of article 47, or after the Seller has declared that he will not perform his obligations within such an
additional period; or
(iii) (iii) after the expiration of any additional period of time indicated by the Seller in accordance with
paragraph (2) of article 48, or after the Buyer has declared that he will not accept performance.
iii)

4)

The notice requirement is especially important under the CISG. The purpose, once again, is to make the parties
communicate so that they might try to save the transaction.

REDUCTION IN PRICE:
a) Under Article 50, Buyer unilaterally can reduce the price proportionate to the non-conformity in quality, quantity, or
timeliness. The reduction has to be reasonable and consistent with the contract price.
i) Article 50: If the goods do not conform with the contract and whether or not the price has already been paid, the
Buyer may reduce the price in the same proportion as the value that the goods actually delivered had at the time of
the delivery bears to the value that conforming goods would have had at that time. However, if the Seller remedies
any failure to perform his obligations in accordance with Article 37 or Article 48 or if the Buyer refuses to accept
performance by the Seller in accordance with those articles, the Buyer may not reduce the price.
ii)
iii)

For example, if there is a sales contract for 400 sheep at $100 each, and Seller delivers 350 sheep, Buyer can reduce
the contract price by $5000.
NB: Buyer may still have a claim for damages under Article 74, but the price reduction is a unilateral self-help
measure which can, if used correctly, reduce total transaction costs.
(1) Article 74: Damages for breach of contract by one party consist of a sum equal to the loss, including loss of
profit, suffered by the other party as a consequence of the breach. Such damages may not exceed the loss which
the party in breach foresaw or ought to have foreseen at the time of the conclusion of the contract, in the light of
the facts and matters of which he then knew or ought to have known, as a possible consequence of the breach of
contract.
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Sale of Goods: Buyers Contractual Remedies

iv) The risk to Buyer is that a miscalculation could lead to Seller claiming breach by Buyer. Miscalculation is more
likely to occur when the dispute is about qualitative as opposed to quantitative non-conformity.
b)

c)

Buyer cannot use price reduction option under Article 50 if Seller can cure under Article 48 or if Buyer has extended the
time for delivery under Article 47, but in the latter instance the limitation on the use of Article 50 continues only during the
period of additional time.
Price adjustments also can be made for partial or excess deliveries. Buyer need not accept a delivery that is smaller or
larger than the contract amount, but Buyer has the option to do so and the price should be adjusted proportionately.
Likewise, Buyer has a choice to accept or not to accept an early delivery: Article 51 and Article 52
i)
ii)

Article 51(1): If the Seller delivers only a part of the goods or if only a part of the goods delivered is in conformity
with the contract, Articles 46 to 50 apply in respect of the part which is missing or which does not conform.
Article 51(2): The Buyer may declare the contract avoided in its entirety only if the failure to make delivery
completely or in conformity with the contract amounts to a fundamental breach of the contract.

iii)

Article 52(1): If the Seller delivers the goods before the date fixed, the Buyer may take delivery or refuse to take
delivery.
iv) Article 52(2): If the Seller delivers a quantity of goods greater than that provided for in the contract, the Buyer may
take delivery or refuse to take delivery of the excess quantity. If the Buyer takes delivery of all or part of the excess
quantity, he must pay for it at the contract rate.
5)

DAMAGES:
a) CISG provisions on damages are common to Buyer and Seller and are not greatly different from common law or SOGA.
b) As indicated in the materials on Sellers remedies, examine Article 74 carefully to determine whether it simply reiterates
the consequential damages rules developed in the series of cases from Hadley v. Baxendale to Robertson Quay and
MFM Restaurants (or The Achilleas in the UK) or whether it expands upon the common law rule.
c) Article 75 contains the standard contract/substituted contract
d) Article 76 contains the contract/market rules
e) Article 77 deals with mitigation
i)

Article 75: If the contract is avoided and if, in a reasonable manner and within a reasonable time after avoidance,
the Buyer has bought goods in replacement or the Seller has resold the goods, the party claiming damages may
recover the difference between the contract price and the price in the substitute transaction as well as any further
damages recoverable under Article 74.
ii) Article 76(1): If the contract is avoided and there is a current price for the goods, the party claiming damages may, if
he has not made a purchase or resale under Article 75, recover the difference between the price fixed by the contract
and the current price at the time of avoidance as well as any further damages recoverable under Article 74. If,
however, the party claiming damages has avoided the contract after taking over the goods, the current price at the
time of such taking over shall be applied instead of the current price at the time of avoidance.
iii) Article 76(2): For the purposes of the preceding paragraph, the current price is the price prevailing at the place
where delivery of the goods should have been made or, if there is no current price at that place, the price at such
other place as serves as a reasonable substitute, making due allowance for differences in the cost of transporting the
goods.
iv) Article 77: A party who relies on a breach of contract must take such measures as are reasonable in the
circumstances to mitigate the loss, including loss of profit, resulting from the breach. If he fails to take such measures,
the party in breach may claim a reduction in the damages in the amount by which the loss should have been
mitigated.

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