Contracts

Contract law and property law very much intersect, contracts as one source or rights and property as one kind of right. Contracts are the most common method of transferring legal title to goods, over delivery, deeds and registration as discussed in conveyances .

Sale of Goods The Sale of Goods Act provide rules for determining the passing of title and risk in sections 16-20b. Sections 21 and 23 pertain to sale by a person who isn t the owner and sale under a voidable title. In contract, for specific goods in a deliverable state, title normally passes when the contract is made, even if payment and delivery are postponed. When does title pass in Wardar s v Norwood & Sons? Applying section 29(3) of the Sale of Goods act title is said to pass when the third party acknowledges to the buyer that he holds the goods on his behalf so when the cold storage official acknowledged to the carriers driver that the goods were his. Why did title not pass when the contract was made? This is because of section 16 of the sale of goods act which states that where there is a contract for sale of unascertained goods, no property in the goods is transferred to the buyer unless and until the gods are ascertained , which of the cartons were to be selected by the buyers was not ascertained. Did title pass before delivery? Therefore, title did pass before delivery. What prevented title from passing in Re Goldcorp Exchange Ltd? The goods were unascertained and therefore the non-allocated claimants did not acquire immediate title by reason of their contract of sale. Did they acquire a proprietary interest after the company purchased the bullion and put it in its own stock? Privy council says no. Sections 20a and 20b of the Sale of Goods Act may have affected the outcome of this case however If the contract of sale is void the sellers title does not pass to the buyer (though they may acquire rights through possession), if it is voidable then the sellers title does pass to the buyer so often these decisions rest on that fact. In Shogun Finance Ltd v Hudson the innocent purchaser of a motor vehicle from a rogue who had obtained it fraudulently by signing a hire-purchase agreement with a forged signature did not obtain a good title to it. The Law Lords supported the finance company and stated that the innocent purchaser could not win because the debtor (supposedly Mr Patel who s signature was forged) had not disposed of the vehicle to him as required by the 1964 Hire Purchase Act that Mr Norman, the innocent party was relying on. Mistaken identity is the basis for rescission of contract.

Land Contracts Contracts for the sale of land differ from contracts for the sale of goods in several important respects... Title to land does not pass when the contract is made, the contract is a registration.

A contract to dispose of land is not valid unless it comlies with the ormalities set out in s2 of the Law of Property Act 1989. Most contracts for the sale of land are specifically enforceable (purchasers can compel the vendors to transfer title and do not have to settle for damages for non-performance since an award of damages is not an adequate substitute for performance as land is generally unique). Contracts for the sale of goods are only specifically enforceable if the goods are hard to obtain, Douglas v Ley. Specific performance is an equitable remedy which provides a proprietary effect in equity as equity regards as done what ought to be done. Under a contract for the sale of a fee simple estate, the vendors become constructive trustees for the purchasers. Once the purchasers have paid the purchaser price in full and the date set for completion has arrived it is clear that the vendors are bare trustees with no beneficial interest in the land and under a duty to preserve it and convey title. Prior to completion date, the vendors do have a beneficial interest with a right to possession for their own benefit and a right to be paid the purchase price. At this stage it appears that beneficial ownership is shared by the parties. The sum of this is as was stated in Jerome v Kelly the seller becomes a trustee for the buyer; the buyer has an equitable interest in the subject-matter; and the contract is enforceable against a 3rd party who becomes owner of the property. Mountford v Scott is a case where Brightman J considered whether the plaintiffs proper remedy in the case was damages rather than specific performance as the agreement part of the contract an option for 6 months to purchase the house An option was determined to be no more than an ordinary offer coupled with a promise not to withdraw during the period stated though equity may not enforce a promise not under deed and the £1 consideration for Mr Scott s option was merely a token payment and did not in any real sense represent a purchase price for the grant of the option. It was concluded that an option to purchase land does create an equitable interest in theland over which it is exercisable. It is only necessary as far as Brightman could see, for the option to be validly created and therefore the plaintiffs should be granted specific performance. Pritchard v Biggs and the Land Registration Act 2002 s115. How is a right of pre-emption (right of first refusal) different from an option to purchase and why? A right of pre-emption does not create an interest in land and confers no immediate right upon the prospective purchaser. It imposes a negative obligation on the possible vendor requiring him to refrain from selling the land to any other person without giving to the holder of the right of first refusal the opportunity of purchasing in preference to any other buyer. It is not an offer and in itself it imposes no obligation on the owner of the land to sell the same. He may do so or not as he wishes. But if he does decide to sell then the holder of the right of first refusal has the right to receive the first offer, which he also may accept or not as he wishes. The right is merely contractual and no equitable interest in the land is created by the agreement.

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