Goode on Commercial Law

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Garey Daniel
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1 Goode on Commercial Law Fourth Edition Edited and fully revised by Ewan McKendrick LexisNexis

2 Contents Foreword Preface Preface to the Third Edition Preface to the Second Edition Foreword to the First Edition Preface to the First Edition Acknowledgements List of Figures Table of Statutes Table of Statutory Instruments Table of Codes Table of EC Treaties and Legislation Table of Conventions and Model Laws Table of Uniform Rules, Uniform Trade Terms and Restatements Table of Cases xvii xix xxi xxv xxix xxxi xxxiv xxxv xxxvii li lv lvii lix lxiii lxv PART ONE THE FOUNDATIONS OF COMMERCIAL LAW 1 The Nature and Sources of Commercial Law 3 1. The law merchant 3 2. The founding of English commercial law 6 3. The nature of commercial law 8 4. The interests to be protected The principal sources of commercial law The limitations of judicial precedent The problem of language The economic analysis of law 24 2 Basic Concepts of Personal Property Classification of rights Property and obligation Personal property defined The distinguishing characteristics of personal property Legal ownership Equitable ownership Possession Dealings in goods Dealings in intangibles 51

3 viii Contents 10. Essential elements for the consensual transfer of real rights Conflicting claims to pure personalty The effect of transfers by a non-owner Identifying the object of a transfer obligation The protection of property rights through the law of torts 66 3 Some Aspects of Contract Law The nature and function of contract law Contract, tort and restitution Promise and bargain Contract as a reflection of the will of the parties Formation and avoidance The classification of statements made in a contractual setting Ascertaining the contract terms Construing the contract Restrictions on what can be validly stipulated The privity rule and its consequences Variation and novation Waiver and estoppel Remedies for misrepresentation Performance of the contract Remedies for breach of contract Defences to a contract claim Illegality Impediments to performance and the doctrine of frustration Commercial Contracts Commercial and non-commercial contracts Contract types and structures Factors influencing the choice Market contracts and their organization The legal power of the market Agency in Commercial Transactions The concept of agency Sources of agency law Types of agent Authority and power of an agent Actual, apparent, and usual authority Conditions needed to be able to invoke apparent authority Ratification of acts done without authority Relations between principal and agent Position of third party: agency disclosed Position of third party: agency undisclosed Termination of the agent's authority Dispositions by and to A 195

4 Contents ix PART TWO DOMESTIC SALES 6 A Brief History of Sales Law The Contract of Sale: Its Nature and Function Ambit of the Sale of Goods Act The language of the Sale of Goods Act The contract of sale defined The significance of the statutory definition Documentary and non-documentary sales Consumer sales The Passing of the Property Identification of the contract goods Property: some general aspects Claims to goods forming part of a bulk The time when property passes to the buyer Risk and Frustration The meaning of 'risk' The general principle of risk: res perit domino Wholly unascertained goods Quasi-specific goods Identified goods Goods supplied on approval or on 'sale or return' Insurance The Sale of Goods Act rules on frustration Effect of frustration at common law Delivery The concept of delivery The relationship between implied terms and the delivery obligation Modes of delivery The delivery point Time of delivery Expenses of delivery Excuses for non-delivery The buyer's duties Instalment deliveries Remedies for non-delivery The Statutory Implied Terms in Favour of the Buyer Conditions and warranties Title, freedom from encumbrances and quiet possession Correspondence with description Quality Fitness for purpose 343

5 x Contents 6. Correspondence with sample The exclusion of liability for fitness, quality and correspondence with description or sample Should further terms be implied? The effect of replacement or repair of defective goods Rejection and its Consequences The right to reject Time of rejection Mode of rejection Effectiveness of notice to reject Loss of right to reject The effect of improper rejection The effect of lawful rejection The right to cure Acceptance The meaning of 'acceptance' Acceptance as non-rejection of an imperfect tender An outline of changes to the rules on acceptance What constitutes acceptance The effect of acceptance The Buyer's Remedies for Misrepresentation or Breach by the Seller The remedies in outline Anticipatory breach Non-delivery Delay in delivery Tender of nonconforming goods Defect in seller's title Damages for breach of warranty 'Available market' The relevance of subcontracts by the buyer A critique of the market-price rale Additional remedies of the consumer buyer Duties of the Buyer and Remedies of the Seller for Misrepresentation or Breach Duties of the buyer The seller's remedies in outline Taking of delivery Acceptance Payment Rescission of the contract Anticipatory breach Refusal to take delivery Non-acceptance 434

6 Contents xi 10. Delay in taking delivery Remedies for non-payment Title Conflicts between Seller or Buyer and Third Parties The competing claims for protection The nemo dat rule and its common law exceptions Statutory exceptions to the nemo dat rale Conflicts as to proceeds Remedies in a conflict situation Proposals for reform 481 PART THREE MONEY, PAYMENT AND PAYMENT SYSTEMS 17 Concepts of Money and Payment Money Intangible money Payment Payment systems Legal effects of interbank credit transfers Completion of payment of an in-house credit transfer Contract netting (netting by novation) Settlement Instruments Generally What is an instrument? Classes of instrument Historical background The autonomy of the payment obligation Certainty and unconditionality? The negotiable instrument as an abstract payment undertaking Decline in the importance of instruments Bills of Exchange The statutory definition Issue and acceptance Transfer The holder Accommodation parties and accommodation bills Liabilities of parties Prerequisites of enforcement Remedies for dishonour Defences to a claim on a bill Discharge Effect of bill on underlying contract Security over bills Advantages of a bill 566

7 xii Contents 20 Cheques and the Duties of Bankers in Relation Thereto Definitions and distinguishing characteristics Form of a cheque Crossings The cheque clearing system When is a cheque deemed to have been paid? The banker-customer relationship The collecting bank The paying bank Other Instruments Promissory notes Bankers' drafts Travellers' cheques Negotiable instruments as investment securities 611 PART FOUR SECURED FINANCING 22 The Classification and Characteristics of Credit and Security The nature and forms of credit The secured creditor versus the unsecured creditor Consensual security Legal security The incidents of real security Attachment, perfection and priorities The transfer of security rights The Creation, Enforcement and Transfer of Security Rights The grant of security: contract and conveyance The ingredients of attachment Effect of attachment Enforcement of the security Transfer of the security Assignment of security without debt, and vice versa Principles of Perfection and Priorities The need to perfect Methods of perfection Priorities: some general points Registration requirements and their impact on priorities The after-acquired property clause and the purchase-money security interest Circularity problems General conclusions on perfection and priorities under English law 718

8 Contents xiii 25 The Floating Charge Evolution of the charge The nature of the charge Creation of the charge Crystallization of the charge Effect of crystallization as between chargor and chargee Effect of crystallization as between chargee and third parties Priorities The future of the floating charge 736 PART FIVE SPECIFIC FORMS OF SECURED BUSINESS FINANCE 26 General Financing Considerations Selecting the security instrument The assets cycle Types of finance required The functional classification of collateral Conditional Sale and Hire-Purchase The financing technique Conditional sale Hire-purchase Relations between finance house and dealer Relations between dealer and buyer or hirer in direct collection transactions Tracing proceeds of authorized resales The Finance Lease The nature of the finance lease Reasons for use Setting up the transaction The triangular relationship The rights and duties of lessor and lessee inter se The lessor and the supplier More developed structures The lessor and third parties Financing against Stock and Receivables Stocking finance Receivables financing Guarantees The legal nature of a guarantee Types of guarantee Unilateral nature of the contract Relations between creditor and guarantor Rights of the guarantor against the debtor 893

9 xiv Contents 6. Discharge of the guarantor Contribution between guarantors 899 PART SIX CORPORATE INSOLVENCY 31 Principles of Corporate Insolvency Law Historical background Winding up distinguished from bankruptcy The regimes of corporate insolvency The objectives of corporate insolvency law The cardinal principles of corporate insolvency law Subsidiary principles The winding-up process Proof and ranking of claims in winding up Vulnerable transactions Administrative receivership Administration Liability of directors for improper trading Cross-border insolvencies 934 PART SEVEN INTERNATIONAL TRADE AND FINANCE 32 The Characteristics and Organization of International Sales Transactions Characteristics Trends in export procedures Problems peculiar to export sales The Single European Market Sources of law The delivery point on sale to an overseas buyer A typical export transaction Documents in export sales Breach of duty to tender documents The Vienna Convention on International Sales Sphere of application of CISG Formation of the contract Rights and duties of the parties Documentary Sales Strict f.o.b Extended f.o.b C.i.f The Financing of International Trade Payment arrangements generally The documentary bill 1054

10 Contents xv 3. The documentary credit: nature, mechanism and relationships Documentary credits: grounds for withholding or blocking payment The transfer of a credit and its proceeds Back-to-back credits Raising of funds by seller against drafts or credits Raising of finance by buyer on security of imported goods Demand guarantees, performance bonds and standby credits Rights and Duties of the Sea Carrier Sources of law Application of the Hague-Visby Rules The parties to the contract of carriage Formation and evidence of the contract Duties and liabilities of the carrier under or by virtue of the contract of carriage Evidence and burden of proof in contractual claims against the carrier Duties and liabilities of the shipper Transfer and loss of contractual rights against the carrier Carrier's rights against transferees Claims against the carrier and others in tort Claims based on bailment and sub-bailment To whom defences and limitations of liability are available Multimodal transport operations Conflict of Laws Jurisdiction: the two regimes English domestic jurisdiction rales Jurisdiction under Brussels I Recognition and enforcement of foreign judgments: domestic rales Recognition and enforcement of judgments under Brussels I Special EC procedures Determining the applicable law: some preliminary points The law applicable to contractual obligations The law applicable to the sale of goods The law applicable to the assignment of debts The law applicable to securities held with an intermediary Foreign money obligations 1244 PART EIGHT THE RESOLUTION OF COMMERCIAL DISPUTES 38 Commercial Litigation Litigation and its alternatives 1251

11 xvi Contents The nature of litigation The Civil Procedure Rules and the courts The interim stages Judgment without trial Stages in a contested Queen's Bench action Forum non conveniens Anti-suit injunction Interim applications Costs Enforcement Appeals Transnational litigation Commercial Arbitration 1. The nature of arbitration 2. Arbitration versus litigation 3. Types of commercial arbitration 4. The development of English arbitration law 5. The sources of arbitration law 6. The arbitration agreement 7. Principles of English arbitration law 8. The principles examined 9. Effectiveness of the agreement to arbitrate The conduct of the arbitration 11. Judicial review of arbitral awards The enforcement of an English arbitral award International commercial arbitration 1338 PART NINE ENVOI 40 Final Reflections Are there principles of commercial law? The philosophical foundations of commercial law Should commercial law be codified? Towards a new lex mercatoria? 1353 Index 1357

Business Contracts in International Markets

Bruno Linden Gertrud Roos Business Contracts in International Markets (f^studentlitteratur Contents Preface 11 PART ONE Business Decisions in the International Market Place 13 1 Components of International