LAW10013 Week 2: Week 2 Collab Notes

Week 2 – Sale of Goods

Subject: LAW10013 – Commercial Law Lecturer: Nick Nicolopoulos Date: TP2 2025 Materials: Transcript + Slides

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Overview

Topic Summary This week introduced the Sale of Goods Act 1958 (Vic) and examined contracts for the sale of goods as a statutory overlay upon general contract law. The unit emphasised the formation, classification of goods, implied terms, title and risk, performance, and remedies for breach. Students explored distinctions between conditions, warranties, and intermediate stipulations, and learned when risk and property pass to the buyer. Bianca’s case study was used to apply these principles to defective goods sold online.

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Key Concepts and Legal Doctrines

1. Sale of Goods – Formation

Definition

A sale of goods contract involves a transfer or agreement to transfer property in goods for money consideration (Goods Act 1958 (Vic) ).

Elements / Test

• Goods (existing, future, specific, unascertained)
• Money consideration
• Transfer or agreement to transfer property

Key Cases & Authorities

• <Badge text="" variant=“note” /> (1899) 1 QB 413 – Sale by description occurs even when goods are seen but purchased relying on description ::: > “Where goods are sold by description, it is not enough that the goods are merely merchantable; they must also correspond with the description.”

— Queen’s Bench – Citation: <Badge text="" variant=“note” /> (1899) 1 QB 413

Lecturer Notes

• Students were reminded to ‘follow the goods’ and determine where property, risk, and possession sit at each point
• Importance of differentiating an actual transfer vs an agreement to transfer

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2. Classification of Goods

Definition

Goods are categorised as:

• Existing goods: Owned or possessed at contract time
• Future goods: To be manufactured or acquired after contract
• Specific goods: Identified at contract time
• Unascertained goods: Not specifically identified at contract

Lecturer Notes

• Students were encouraged to track goods through the transaction chain and assess legal implications at each stage

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3. Terms of the Contract

Definition

• Condition: Fundamental term, breach allows rescission + damages

• Warranty: Minor term, breach allows damages only
• Intermediate stipulation: Between condition and warranty; seriousness of breach determines remedy (NSW Act)

Key Cases & Authorities

• Henry Kendall & & Sons Ltd [1969] 2 AC 31 – Merchantable quality defined as suitable for usual purpose ::: > “Merchantable quality means that goods are in such a state that they would be saleable under that description.”

— House of Lords – Citation: Henry Kendall & & Sons Ltd [1969] 2 AC 31

Lecturer Notes

• Discussion on hierarchy of terms and implications for remedies
• Students must identify whether terms are express, implied, or intermediate

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4. Implied Terms under Goods Act

Definition

Implied by Goods Act 1958 (Vic) unless excluded:

• Title
• Description
• Merchantable quality
• Fitness for purpose

Lecturer Notes

• Not all implied terms can be excluded (e.g. fit for purpose in consumer transactions)
• Importance of whether goods are sold “by description” to trigger protections

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5. Transfer of Property and Risk

Definition

• Property = ownership/title

• Possession = custody/control
• Transfer rules differ based on goods type:
  • Specific goods: pass when parties intend
  • Unascertained goods: pass only once ascertained

Key Cases & Authorities

• (2000) 202 CLR 588 – Retention of title clause effective against insolvency ::: – Citation: (2000) 202 CLR 588

Lecturer Notes

• “Romalpa” clauses protect sellers if buyers become insolvent
• Possession ≠ ownership; risk follows ownership unless otherwise agreed

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6. Performance and Acceptance

Definition

• Delivery can be actual or constructive

• Buyer’s duties: accept goods and pay
• Acceptance = conduct indicating acceptance or retention beyond reasonable time

Lecturer Notes

• Delivery of documents may suffice as constructive delivery
• Buyer’s silence or conduct post-delivery may indicate acceptance

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7. Remedies

Seller’s Remedies

• Against goods: lien, retention, stoppage in transit, resale
• Against buyer: action for price, damages for non-acceptance

Buyer’s Remedies

• Rescission if condition breached
• Damages for:
  • Breach of condition
  • Breach of warranty (diminution in value)
  • Non-delivery
  • Specific performance (only if goods are unique)

Key Cases & Authorities

• <Badge text="" variant=“note” /> (1854) 9 Exch 341 – Remoteness of damage in contract ::: > “Loss must be reasonably contemplated by both parties at contract time.”

— Court of Exchequer – Citation: <Badge text="" variant=“note” /> (1854) 9 Exch 341

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IRAC Case Summaries

Case: Henry Kendall & & Sons Ltd [1969] 2 AC 31

Element	Detail
Issue	Whether the goods supplied were of merchantable quality
Rule	Implied condition of merchantable quality under sale of goods legislation
Application	The goods were unfit for their usual commercial purpose
Conclusion	Breach of condition established
Ratio	Merchantable quality requires goods be fit for ordinary use and resale

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Case: <Badge text="" variant=“note” /> (1854) 9 Exch 341

Element	Detail
Issue	When are damages for breach of contract too remote?
Rule	Loss must be foreseeable and within contemplation of both parties
Application	Delay caused unforeseeable loss; damages denied
Conclusion	Loss too remote, no damages awarded
Ratio	Damages are recoverable only if they arise naturally or were foreseeable by both parties

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Case: (2000) 202 CLR 588

Element	Detail
Issue	Whether retention of title clause protected seller from insolvency
Rule	Romalpa clause valid if clearly expressed and incorporated
Application	Clause operated to preserve seller’s proprietary rights
Conclusion	Seller had superior title; goods not part of insolvent estate
Ratio	Retention clauses can validly delay transfer of title despite possession by buyer

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Worked Examples

Problem: Bianca’s Online Shopping Disaster

Facts Bianca purchases gardening equipment described as “brand new”. Goods are second-hand and defective. Retailer claims disclaimer on liability via online T&Cs.

Issue(s)

• Does the Goods Act 1958 (Vic) apply?
• Were there breaches of implied terms (description, merchantable quality)?
• Can the seller validly exclude these terms?
• Are damages for Bianca’s car window recoverable?

Lecturer’s Reasoning

• Contract of sale exists: goods, price, transfer
• Section 18 implied terms triggered: description, merchantable quality
• No evidence exclusion clause was effective (express agreement needed)
• Damages for car likely too remote under

Answer Summary ✓ Contract governed by Goods Act 1958 ✓ Goods breached implied conditions ✓ Seller likely cannot rely on exclusion clause ✗ Car window damages likely unrecoverable as too remote oai_citation:0‡LAW20009 Collab Transcript Week 2 - Supplementary Discussion.txt

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Practical Exam and Study Tips

Study Tips

• Begin with identifying whether the contract is governed by statute (e.g. Goods Act)
• Always check for sale by description → triggers implied terms
• Consider nature of goods (specific, future, unascertained) to determine remedies

Memory Aids / Mnemonics

• FITD: Fitness, Implied, Title, Description
• CPR: Condition, Performance, Remedy

Important Warnings

• Beware: Acceptance can occur by conduct even if defective
• Not all exclusion clauses are valid; express agreement is key
• Damages must not be too remote

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Supplementary Reading and References

Cases Mentioned (AGLC4 format)

• (2000) 202 CLR 588
• <Badge text="" variant=“note” /> (1854) 9 Exch 341
• Henry Kendall & & Sons Ltd [1969] 2 AC 31
• <Badge text="" variant=“note” /> (1899) 1 QB 413

Legislation

• Goods Act 1958 (Vic)
• Australian Consumer Law (Sch 2, Competition and Consumer Act 2010 (Cth))

Other Sources

• LAW10013 Week 2 Slides
• Workshop and Supplementary Transcript Discussion oai_citation:1‡LAW20009 Collab Transcript Week 2 - Supplementary Discussion.txt oai_citation:2‡LAW20009 Collab Transcript Week 2.txt

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Open Questions or Clarifications

• Can online sellers restrict statutory warranties through web-based exclusion clauses?
• How does the Australian Consumer Law overlay with state-based goods legislation in B2C transactions?