Position of law in the case of 3D-Max Written Assignment 2 EKR111

The three legal issues I have identified and will discuss in this text are Retention of Title
(ROT) Clause; Sale of goods and transfer of title and we will discuss the rights of third
parties in contracts.
The relevant legal statues I will refer to in the text include the Sale of Goods Act 1979 (UK)
and Consumer Rights Act 2015 (UK), and general principles of contract law will be discussed
in the text.

To start of the analysis, I will discuss shortly a case law that serves as a foundation for the
retention of title issue identified. The relevant case is Philips v Brooks Ltd [1919] where the
court analyzed the effectiveness of retention of title concerning the sale of goods. In Philips v
Brooks [1919] a seller had delivered goods to a buyer, but the contractual agreement stated
that the seller retained ownership until the payment was made in full. The buyer eventually
became insolvent before completing the final installment. The court argued that the seller
held a valid retention of title which was enforceable even when considering the buyers
insolvency. This case shows that efficiently constructed retention of title clauses can give
significant benefits for sellers in similar situations. This case is relevant to the first legal
issue, retention of title in the case of Richard v Yamamoto.

The Retention of Title (ROT) Clause is a type of contractual provision that gives the seller the
ability to retain legal ownership of a given commercial good until they are paid for. A ROT
acts as a safety net for suppliers in case the purchaser becomes insolvent. In our case of 3D-
Max contractual agreement with Yamamoto a ROT clause is included stating that Yamamoto
retains ownership of the printers until the full price is paid.
Under the Sale of Good Act 1979 (UK) it states that ownership is transferred when the
involved parties intend it to pass this is determined by the terms of the contract and the
circumstances relevant to the case. Additionally, the Sale of Goods Act 1979 (UK) states that
when goods are sold under specific contractual terms such as in our case on credit terms,
Yamamoto retains proprietary interest in the printers until the contractual terms are met which
is payment in full.
Thus, in our case 3D-Max v Yamamoto the effectuality of the retention of title clause for
Yamamoto depends on the clarity of the clause and other relating factors, if Richard defaulted
on the last payment Yamamoto may have the legal arguments to repossess the 3D-printers.

Moving on to the next identified legal issue concerning the case of 3D-Max which is the area
concerning sale of goods and transfer of title. The Sale of Goods Act 1979 (UK) governs the
rules surrounding the transfer of ownership in commercial transactions. Johns’ contractual
agreement with Yamamoto must be examined, if Richard had acquired full legal ownership
by paying all instalments, then he would have the legal right to sell the printers to Richard.
But in our case the contractual agreement between Richard and Yamamoto concludes that as
he defaulted on the last installment Yamamoto still retains ownership until the full payment is
made. We also need to consider the legal consequences of the resale of the printers to John
which might have breached several statues regarding contract law principles. The resale of
the printers to John raises questions regarding enforceability of their contractual agreement,
under contract law statues the terms of an agreement such as transfer of title must be stated
clearly and be legally binding.
Moving on the third and last identified legal issue surrounding 3D-Max. Johns’ involvement
and eventual sale to Beth raises questions regarding third party rights in commercial
transactions. Several statues are relevant for the analysis of the rights of the third parties
involved in the transaction. The statues include the Contracts Act 1999 (UK) and as
previously mentioned the Sale of Goods Act 1979 (UK) both will be instrumental in the third-
party analysis. The Contracts Act 1999 (UK) provides a legal framework for rights on third
parties involved in commercial transactions. It is thus crucial to determine whether Beth’s
situation falls within the legal framework regarding third parties.
Beth purchased 3D-Max from Richard which most likely included all the printers that were
acquired from Yamamoto. The question of whether the purchase of 3D-Max has resulted in
Beth acquiring the legal title of the printers is dependent the legal framework provided by the
contracts act. Under contract law if the agreement between John and Beth included language
that would suggest that Beth has certain rights such as the right to acquire the printers then it
would be considered under the Contract Act 1999 that the contract confers benefits upon the
third party which in our case is Beth. This would potentially provide Beth with legal
framework to enforce the terms that were specified in the contractual agreement between
Beth and John.

Another statue that can be considered is the Privity of Contract. Privity of Contract is a
doctrine under common law that states that you cannot enforce the benefit or be liable for any
obligation under a contract to which you are not a party. Which concludes that only parties
to a contract can be sued or sue under it. Under traditional consideration of the doctrine of
privity of contract Beth would not be held liable for any obligations in the contractual
agreement between John and Richard. However there have been modern modifications in the
privity of contract for example the Contracts Act 1999 (UK) states that there are exceptions to
the privity of contract that makes third parties subject to obligations stated in contractual
agreements under given circumstances. Which could result in that Beth is legally obliged to
take into consideration the obligations that might occur as a result of negligence by Richard
of not taking into account the position of law in the case of the sale of the printers.

To conclude the analysis, we can say with certainty that the legal issues that have been
presented stem from Richard’s inability to pay the last installment to Yamamoto and the
subsequent sale of the printers to John. The key issues identified include Yamamoto’s
retention of title and their possibility of repossession as a result. The transfer of ownership
between Richard, John and Beth is a complex legal matter dependent on the current statutory
frameworks surrounding the Sale of Goods Act 1979 (UK), Contracts Act 1999 (UK) and the
doctrine of privity of contract. The resolution to this problem is heavily dependent on the
contractual agreements between the parties and the rights of third parties in commercial
transactions.

Reference list:

Case Law Reference: Phillips v Brooks Ltd [1919] 2 KB 243

https://www.claims.co.uk/knowledge-base/contract-law/privity-in-contract-law

https://www.simmons-simmons.com/en/publications/ck0af4xrinal00b33gjidsg3b/290419-
developments-in-contract-rights-of-third-parties#

https://www.legislation.gov.uk/ukpga/1979/54/contents