Scope and effect of sale of goods act Essay Example | Topics and Well Written Essays - 1000 words

Scope and effect of sale of goods act - Essay Example The passing of property from the seller to buyer gained significance in the context of the buyer placing an order with the seller and then becoming insolvent. Had the product ordered for by the buyer already been shipped there arose a discrepancy in regard to the rights of the seller since he would unwillingly provide credit. The act clearly states that until all of the terms of the contract of the sale of goods, mainly the payment for the product, are met by the buyer, the seller has the right of disposal over the product. The clause â€Å"notwithstanding the delivery of the goods to the buyer† (Sales of Goods Act 1979, s19 (1)) gives a right to the seller to claim possession of the goods in question if the buyer has not fulfilled the terms of the contract. This clause is unlike those of international contracts which make property pass effective at a particular physical point or time such as during payment or at the loading port of ships (Ziegler, 139). (b) The rights of an u npaid seller against the buyer The rights of an unpaid seller are treated in section 19 of the act by allowing the seller, the title of retention of the goods to be sold to the buyer unless all the terms of the contract for the sale of the goods is fulfilled by the buyer. The rights of an insolvent or bankrupt buyer are superseded by the title of retention clause of the act whereby the seller has the right to repossess the goods even in case it has already been shipped to the buyer. ... In such cases, it is argued that it would upset the administration of the buyer’s business and hence the seller must not be given the right to disposal (Tomasic, 199). 2. Romalpa Clause Aluminium Industrie Vaassen BV v Romalpa Aluminium Ltd Section 19 of the Act clearly states the rights of the unpaid seller; however a unique situation arose in 1974 when a Dutch manufacturer, Aluminium Industrie Vaassen BV brought out an action against an English company, Romalpa Aluminium Ltd. The plaintiffs claimed that they were entitled to the aluminium foil that was at the premises of the defendant since they had not paid for the goods and to the proceeds of the foil that had been sold to third parties by the defendant. The contract made between the plaintiff and the defendant reiterated the right of the seller over the goods until payment was made by the buyer, it also did not provide any stated power to the defendant to sell the foil; however it was agreed by both the parties subsequent ly that the defendant had an implied power to sell the foil. This agreement did not help either of the parties by any margin. While the defendant argued that it had sold the foil on its own account and was not an agent of the plaintiff’s, the plaintiff on the other hand chose to exercise the right of the seller as put forward by the Sales of Goods Act. . The case had become complex on two accounts: a part of the foil delivered to the defendant had been sub sold and this foil that was sub sold was in the same form as that delivered to the defendant. The court had to decide whether the defendant was acting merely as an agent of the plaintiff while sub selling the foil or if the