COMMERCIAL LAW SUMMARY NOTES

Size: px

Start display at page:

Download "COMMERCIAL LAW SUMMARY NOTES"

Abraham Stafford
5 years ago
Views:

1 COMMERCIAL LAW SUMMARY NOTES Contents: Page 02 Commercial Transactions Page 06 Agency Page 11 Australian Consumer Law: Statutory Guarantees Page 31 Leasing Finance and Bailment Page 37 Personal Property Securities Act Page 50 National Consumer Credit Protection Act Page 69 Private International Law relevant Page 73 International Sale of Goods EXAM IS 2 HOURS WITH 10 MIN READING TIME 2 PARTS ANSWER ALL Q S IN BOTH PARTS Commercial Law Notes; 1

2 COMMERCIAL TRANSACTIONS PROPERTY: Definition and Nature of Property McCaughey v Commissioner of Stamp Duties The word property is used in different senses. It may denote either objects of proprietary rights, such as pieces of land, domesticated animals, and machines; or the proprietary rights themselves In common parlance it is usually employed in the former sense, but in the language of jurisprudence in the latter Property, in the sense of proprietary rights, may exist in relation to physical objects, or to tangible things such as debts or patent rights. Each separate piece of property consists of a bundle of proprietary rights relating to a particular object, including rights administration and rights of enjoyment, the totality of which must be vested in a single person, or may be divided amongst a number of persons, as for example when they are shared by several who together own them all, jointly or in common Jordan CJ. Characteristics of Property: National Provincial Bank Ltd v Ainsworth: Before a right or an interest can be admitted into the category of property, or of a right affecting property, it must be definable, identifiable by third parties, capable in its nature of assumption by third parties and have some degree of permanence or stability. Capable of being assigned although there are exceptions e.g. statutory rights Must be able to be viewed as of some value to a third party These are the general elements Elements of Assignability: Assignability is not always essential, eg some statutory property rights are stated to be inalienable R v Toohey; ex parte Meneling Station Pty Ltd. Some forms of property which are not assignable: Personal rights A bare right to sue A contract or statute may specify that the right is not assignable. Property Rights v Personal Rights: Property rights are enforceable against the world. Personal rights are enforceable against other parties in the contract or an individual only (such as a tort claim). o Personal rights are vulnerable to insolvency, death and missing persons. Commercial Law Notes; 2

3 Distinction between real property and personal property: Real property Land and all things embedded in land or attached to it (minerals, trees, buildings): cannot be removed permanently fixed to the land with intention of never being removed Indestructible, immoveable, appreciates in value Unique contractual remedy specific performance rather than damages Personal property Separated into two categories: chattel reals, and chattels personal Chattels real e.g. leases (not covered in this course) Impermanent, moveable, temporal, fragile, often depreciates in value Common/not unique (related remedies damages unless unique e.g. work of art) Includes choses in action, equitable and legal choses Commercial Law Notes; 3

Equitable Choices in Actions include: Legal Choices in Actions include: An interest in a partnership Debts A legacy under a will Bills of Exchange and Cheques An interest in trust

4 Equitable Choices in Actions include: Legal Choices in Actions include: An interest in a partnership Debts A legacy under a will Bills of Exchange and Cheques An interest in trust funds Rights of action under a contract Reversionary interest under a will Benefit of a contract Shares in a company Intellectual property rights Bills of Lading Commercial Law Notes; 4

5 OWNERSHIP AND POSSESSION: What is Ownership? Ownership may include a right to use, sell, give away, put into a trust, use as security for a loan, share with co-owners and leave in will. Co-ownership: where joint tenants or tenants own common rights. o Tenants in common; shares proportionate to the size of their contribution What is meant by title in law? Title typically means ownership If you own property, then you have legal title But there are forms of title and characteristics of title which don t necessarily go together with being the owner e.g. where you have possession of something Possession is a form of title, it gives the person possessing the item, the legal power to do certain things and to enforce certain rights even though they are not the owner Law presumes that a person who possesses an item is the legal owner of the item o A defeasible form of title; defeasible to the true owner, to someone who has a superior title What is Possession? To possess property means to demonstrate an intention to exercise exclusive control (or dominion) over the item: Parker v British Airways. Types of Possession: o Actual: physical custody and intention to exercise exclusive control (possession in fact). Compare mere physical custody with no knowledge or intention to control. o De Facto: exercise of dominion and control over item not mere physical custody (eg. hiding an item). Employer s rights in goods used by an employee. o Legal: possession in the eyes of law. This allows the person to sue in relation to the item. Holder of legal possession presumed to be the owner. Will usually coincide with actual possession, but need not Legal possession remains even if actual possession abandoned. o Right to Possession: enforceable right to obtain actual possession (ordinary incident of ownership). Treated as possession for certain purposes. Bailee acting under terms of bailment has right to possession, not the bailor (owner). Right to possess will ordinarily coincide with legal and actual possession (except for wrongful dispossession ie. theft). o Constructive Possession: a right to possession without having actual or legal possession. Commercial Law Notes; 5

6 Legal Significance of Possession: Possession confers a legal right to retain control of an object against any other person except the person with ownership rights. Except for bailee acting under terms of bailment. Possession may allow the possessor to institute or defend legal proceedings in respect of the item. Armory v Delamirie That the finder of a jewel, though he does not by such finding acquire an absolute property or ownership, yet he has such a property as will enable him to keep it against all but the rightful owner, and consequently may maintain trover (conversion) Parker v British Airways per Donaldson LJ. Thus, merely finding an item is not enough, the exercise of an intention to exercise exclusive control needed. Finding an Item (Cases): Items found attached to land: o Hannah v Peel, South Staffordshire Water, Parker (presumption that goods on land are not lost). Items found on the land: o Parker v British Airways, and Bridges v Hawkesworth. Items found during employment belong to employer, unless merely incidental to work: Byrne v Hoare. Possession and Finding: Possession involves a form of legal title: o Even if by finding or by theft (Costello). Personal property may typically be transferred by delivery. Mere possession does not transfer ownership (title), unless intention to abandon was made by the true owner. Possession may be defended against all except the true owner (Armory). Transfer of Personal Property: Typically by delivery. Gift of personal property: o Intention to give by donor. o Acceptance by done. o Delivery. Knappy v Knapp gift of car to wife by husband, no transfer of registration. Flinn v White gift of piano by father to daughter, remained in common custody but no delivery. Other Ways to Transfer Title: Will Deed (Conveyancing Act 1919 s 38) Sale: Sale of Goods Act Statutory Assignment: Conveyancing Act s 12. In Equity Commercial Law Notes; 6

7 AGENCY: Definition: Agency is the relationship between two parties where one (the agent), with the authority of the other (principal), can bind that other in a legal relationship with a third party. Principal gives authority to agent Classification: Agent enters into a legally binding relationship with a third party Third party enforces obligation against the principal Special agents: specific role, a one off transaction. General agents: a class of transaction involvement in a particular trade or business. Universal agent: unlimited authority to do all a principal may do eg power of attorney. Creation of Agency: Express o By writing or words. Estoppel representation. Ratification retrospective. o Someone purports to act as the agent without the principal s knowledge or consent, and the principal then has the option of ratifying (or agreeing to it) that conduct, and thereby taking on the legal obligation to be bound by what the agent has done or rejecting it The liability will then fall on the agent themselves if conduct is rejected (because they weren t acting as a formal agent, but rather as an individual) Agent s rights Can claim a right of indemnity against their principal o I.e. when they incur expenses in acting as an agent o Or when they re acting within their authority But agent won t be liable for the legal relationship that is entered into on behalf of the principal Key cases on agent s authority: Ostensible: Freeman & Lockyer v Buckhurst Properties (Mangal) Ltd) [1964] 2 QB 480 Implied: Hely-Hutchinson v Brayhead Ltd [1968] 1 QB 549 Neither implied nor ostensible: Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising & Addressing Co Pty Ltd (1975) 133 CLR 72 Commercial Law Notes; 7

8 Nature and Scope of Agent s Authority: Actual Authority (express or implied). o Express: specific authorisation expressed in words o Implied: authority attached to office or position; or inferred from conduct of parties or course of business (Hely-Hutchinson v Brayhead). Apparent or ostensible authority. o Principal must have actual or implied authority for representation to be binding. o Principal estopped from denying responsibility (Freeman & Lockyer). Neither Implied nor Ostensible case Crabtree-Vickers Pty Ltd. o It is implied when it is inferred from the conduct of the parties and the circumstances of the case, such as when the board of directors appoint one of their number to be managing director. They thereby impliedly authorise him to do all such things as fall within the usual scope of that office. Actual authority, express or implied, is binding as between the company and the agent, and also as between the company and others, whether they are within the company or external. o Ostensible or apparent authority is the authority of an agent as it appears to others. It often coincides with actual authority. Thus, when the board appoint one of their number to be managing director, they invest him not only with implied authority, but also with ostensible authority to do all such things as fall within the usual scope of that office. Threshold between Actual and Ostensible authority: o But sometimes ostensible authority exceeds actual authority. For instance, when the board appoint the managing director, they may expressly limit his authority by saying he is not to order goods worth more than 500 without the sanction of the board. In that case his actual authority is subject to the 500 limitation, but his ostensible authority includes all the usual authority of a managing director. The company is bound by his ostensible authority in his dealings with those who do not know of the limitation. He may himself do the holdingout. Thus, if he orders goods worth 1,000 and signs himself Managing Director for and on behalf of the company, the company is bound to the other party who does not know of the 500 limitation per Denning MR. REPRESENTATION: The representation which creates apparent authority may take a variety of forms of which the commonest is representation by conduct, ie, by permitting the agent to act in some way in the conduct of the principal s business with other persons. per Diplock. Commercial Law Notes; 8

9 RATIFICATION: Mckeand v Thomas Where someone has purported to enter a contract on behalf of a principal, at a time when they do not have actual authority to enter that contract on behalf of the principal, it is open to the principal to ratify the entering of the contract. If ratification occurs, the person who entered the contract is treated as having had authority to do so, at the time of entering the contract. In other words, the ratification relates back to the time of making the contract Before a person can ratify a contract which has been purportedly entered in their name, that person must have full knowledge of the material circumstances, or else must intend to adopt the entering of the contract regardless of what the material circumstances might be The onus of proving the elements of a ratification rests upon the person who asserts that there has been a ratification Per Cambell J. DUTIES OF AN AGENT: To follow the principal s instructions To act in person (not delegate responsibility) To act in good faith To make a full disclosure of any personal interest To not make a secret profit To exercise reasonable care and skill Boston Deep Sea Fishing v Ansell He puts himself in such a position that he has a temptation not faithfully to perform his duty to his employer [W]here an agent entering into a contract on behalf of his principal, and without the knowledge or assent of that principal, receives money from the person with whom he is dealing, he is doing a wrongful act, he is misconducting himself as regards his agency and that gives to his employer power and authority to dismiss him from his employment as a person who is shewn to be incompetent of faithfully discharging his duty to his principal. Real Estate Services Council v Alliance Strata Management Ltd First, that for a fiduciary such as an agent to receive a commission for which he does not account is a grave breach of his duty Secondly, if full disclosure is made, and an informed consent given by the person to whom the fiduciary duty is owed, the commission may be retained without impropriety by the fiduciary Thirdly, if the fiduciary, before embarking on his fiduciary occupation, stipulates for the retention of commissions as the price of his occupation, the rules governing fiduciaries have got nothing to do with the receipt of commissions Per Meagher JA. RIGHTS OF AN AGENT: Right to remuneration Right to indemnity and reimbursement o New Zealand Farmers Co-Op v National Mortgage and Agency. Right of lien. Commercial Law Notes; 9

10 LIABILITIES OF AN AGENT: Liability of Agent to Principal o Breach of contract not following instructions o Negligence not exercising reasonable care and skill To third parties o Where principal disclosed no liability unless agent operates outside of authority o Undisclosed principal agent may be personally liable or both agent and principal joint liability. UNDISCLOSED PRINCIPAL: If an Agent enters into a contract without disclosing the existence of the Principal either the Agent or the Principal may be liable on the contract. They may both also sue on the contract. The Agent must have intended at the time of the contract to operate on the Principal s behalf. The contract may reveal the Agent is in fact the Principal. See Siu Yin Kwan v Eastern Insurance [1994] 2 AC 199. Factors and mercantile agents Sell goods on behalf of the principal without revealing the existence of the principal Has possession of the goods Factors (Mercantile Agents) Act 1923 (NSW) o S 5(1) Where a mercantile agent is entrusted as such with the possession of any goods any sale pledge or other disposition of the goods made by the agent in the ordinary course of business of a mercantile agent shall, subject to the provisions of this Act, be as valid as if the agent were expressly authorised by the owner of the goods to make the same Commercial Law Notes; 10

PERSONAL PROPERTY NOTES. - all things owned by a person other than land. Divided into choses in action and choses in possession.

PERSONAL PROPERTY NOTES. - all things owned by a person other than land. Divided into choses in action and choses in possession. NOTES PERSONAL PROPERTY - all things owned by a person other than land. Divided into choses in action and choses in possession. Chose means thing Choses in action Intangible. personal right of property.