LA2017 VLe guide full subject book PDF

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Commercial law

Rick Canavan Philip Rawlings

This module guide was prepared for the University of London by: u

Rick Canavan, Associate Head (International Development), Faculty of Business & Law, Manchester Metropolitan University

u

Philip Rawlings, Professor of Law and Graduate Tutor, Faculty of Laws, University College London.

This is one of a series of module guides published by the University. We regret that owing to pressure of work the authors are unable to enter into any correspondence relating to, or arising from, the guide.

University of London Publications Office Stewart House 32 Russell Square London WC1B 5DN United Kingdom london.ac.uk

Published by: University of London © University of London 2018. Reprinted with minor revisions 2019, 2020 and 2021 The University of London asserts copyright over all material in this module guide except where otherwise indicated. All rights reserved. No part of this work may be reproduced in any form, or by any means, without permission in writing from the publisher. We make every effort to respect copyright. If you think we have inadvertently used your copyright material, please let us know.

Commercial law

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Contents Module descriptor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii 1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Introduction

2

11

What is commercial law?

3

12

The function and ethos of commercial law

4

13

Learning outcomes for Commercial law

5

14

Approaching your study

6

15

Study skills

16

The examination

10

Reflect and review

12

8

2 Personal property . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Introduction

14

21

Ownership and possession

15

22

Legal and equitable interests

17

23

Types of personal property

17

24

The transfer of title

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25

Bailment

19

Reflect and review

22

3 Sale of goods: contract, property and risk . . . . . . . . . . . . . . . . 23 Introduction

24

31

The legislative picture

25

32

The scope of the Sale of Goods Act

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33

The scope of the Consumer Rights Act

28

34

What is a contract of sale of goods under the SGA?

29

35

The sale contract

32

36

‘Transfers or agrees to transfer the property’

34

37

Risk

38

Perishing of goods and frustration of contract

43

39

Transfer of title

46

Reflect and review

54

44

4 Sale of goods: performance and implied terms . . . . . . . . . . . . . 55 Introduction

56

41

Terms

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42

Delivery and payment

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43

Implied terms as to title and quiet possession: s 12

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44

Implied term as to description: s 13

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45

Implied terms as to quality: ss 14 and 15

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46

Implied term as to satisfactory quality: s 14(2)

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47

Implied term as to fitness for particular purpose: s 14(3)

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Implied terms in sales by sample: s 15

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49

Limitation or exclusion of liability for breaches of the implied terms under the SGA

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4 10 Terms implied by the Consumer Rights Act

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4 11 Limitation or exclusion of liability in consumer contracts

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Reflect and review

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5 Sale of goods: acceptance, remedies and retention of title . . . . . . . 85 Introduction

86

51

Acceptance

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52

Remedies of the buyer

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53

Remedies of the seller

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54

Consumer remedies

97

55

Retention of title by the seller Reflect and review

98 106

6 Money and banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107 Introduction

108

61

Bills of exchange

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62

The bank/customer relationship

116

Reflect and review

122

7 Credit and security, financing the sale of goods . . . . . . . . . . . . . 123 Introduction

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71

Nature and forms of credit

72

Security

125

125

73

Personal security

133

74

Assignments of choses in action

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75

Set-off

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76

Common law controls over credit

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77

The regulation of consumer credit

143

Reflect and review

152

8 Agency 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153 81

Introduction

154

What is an agency?

155

82

Types of agent

158

83

Creation of agency

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84

The actual authority of the agent

162

85

Apparent authority

164

86

Usual authority: Watteau v Fenwick

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87

Ratification

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88

Agency of necessity

171

89

Capacity

172

Reflect and review

176

9 Agency 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177 Introduction

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91

Relationship with third party: disclosed agency

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92

Relationship with third party: undisclosed principal

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93

Relationship between principal and agent

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Reflect and review

192

Feedback to activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193 Using feedback

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Chapter 3

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Chapter 4

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Chapter 5

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Chapter 8

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Chapter 9

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Commercial law

Module descriptor GENERAL INFORMATION Module title Commercial law

Module code LA2017

Module level 5

Contact email The Undergraduate Laws Programme courses are run in collaboration with the University of London. Enquiries may be made via the Student Advice Centre at: https://sid.london.ac.uk

Credit 30

Courses on which this module is offered LLB, EMFSS

Module prerequisite None

Notional study time 300 hours

MODULE PURPOSE AND OVERVIEW This module is offered as an option to students studying the LLB.

MODULE AIM The module will provide an understanding of the application of legal principles to particular commercial transactions and the practical issues involved. Commercial law is concerned with obligations between parties to commercial transactions and the relationship with rules of personal property. Emphasis is placed on both knowledge of principles and the ability to apply the rules of law to achieve practical solutions to practical problems. Students will become familiar with a range of issues including: ownership of or title to goods; transfers of title and its effect on third parties; passing of property between buyer and seller.

LEARNING OUTCOMES: KNOWLEDGE Students completing this module are expected to have knowledge and understanding of the main concepts and principles of Commercial law. In particular, they should be able to: 1. Explain the concept, functions and sources of commercial law; 2. Understand the fundamental importance of property rights and the need to secure payment and how this has shaped the law; 3. Understand the terms implied into a range of contracts concerning the sale and supply of goods and demonstrate an ability to apply them to solve problems;

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University of London 4. Explain and assess the legal tools available to parties to ensure payment and to protect against the risk of non-payment; 5. Discuss how commercial agreements are concluded through the use of third parties; 6. Demonstrate understanding of the legal conception of the bank/customer relationship and the nature, function and features of bills of exchange; 7. Show understanding of the nature and commercial function of credit, security and the different forms security takes and the mechanisms by which things in action may be transferred by assignment; 8. Understand and critically analyse the consumer credit regime; 9. Demonstrate an understanding of how agency relationships are created, the scope of an agent’s authority and the rights and obligations of agents, principals and third parties in relation to each other; analyse instances of agency that arise without the parties’ explicit consent.

LEARNING OUTCOMES: SKILLS In addition to the skills developed at Level 4, students are expected to be able to: 10. Research and analyse complex and conceptual legal questions; 11. Articulate well-argued solutions to complex legal problems across a range of legal areas drawing on current research; 12. Reflect on learning, identifying areas for improvement and responding appropriately; 13. Evaluate legal issues in a social, economic and political context taking account of their policy and doctrinal importance.

BENCHMARK FOR LEARNING OUTCOMES Quality Assurance Agency (QAA) benchmark statement for Law 2019.

MODULE SYLLABUS (a) Personal property. Define the concepts of property, ownership and possession, the types and nature of personal property, interests in personal property, different contracts for the transfer of interests in personal property. (b) Sale of goods. Distinguish between commercial and consumer sales. Discuss the approach taken to the interpretation of the Sale of Goods Act 1979. Analyse the components of the definition of a contract of sale. Explain the circumstances in which property in goods is passed. Identify how risk is passed. Understand the nemo dat rule. Discuss and illustrate the exceptions to the nemo dat rule. Explain the duties of the seller to deliver and the buyer to accept goods. Discuss the implied terms in ss.12–15 of the Sale of Goods Act 1979. Discuss the relationship between the different implied terms. Outline the limits imposed on attempts by the seller to exclude or restrict liability for breach of the implied terms. Understand and discuss the rules on acceptance. Explain the remedies available to the buyer and the seller where there is a breach of the sale contract. Explain the use of retention of title clauses and the limits of such clauses. Discuss the distinct approach taken by the Consumer Rights Act 2015 and the residual importance of the Sale of Goods Act 1979. Discuss the regime of implied terms and the range of remedies available in consumer sales. (c) Payment mechanisms. Describe the nature of the banking business including describing the distinguishing features of a bank at law. Discuss the nature and function of bills of exchange and how they are defined by law with particular focus on the rules around the negotiation of bills. (d) Credit and security. Understand and distinguish the concepts of credit and security. Explore various mechanisms for financing and securing sales including real security

Commercial law (charge, lien, mortgage, pledge) and personal security (surety and guarantee), the requirements of assignment at both law and equity and an overview of consumer credit. (e) Agency. Define the term ‘agent’. Explain how an agency is created. Discuss the scope of the agent’s authority. Explain the rights and obligations owed by the principal and by the agent to the third party. Explain the rights and obligations owed by the third party to the principal and to the agent. A student is permitted to bring into the examination room the following specified documents: one copy of each of the following: Factors Act 1889; Misrepresentation Act 1967; Supply of Goods (Implied Terms) Act 1973; Unfair Contract Terms Act 1977; Sale of Goods Act 1979; Supply of Goods and Services Act 1982; Consumer Protection Act 1987; Sale and Supply of Goods Act 1994; Sale of Goods (Amendment) Act 1995 and Core statutes on commercial & consumer law (Palgrave Macmillan).

LEARNING AND TEACHING Module guide Module guides are the student’s primary learning resource. The module guide covers the topics in the syllabus and provides the student with the grounding to complete the module successfully. It contains the Module Descriptor, which sets out the learning outcomes that must be achieved. It also includes the core, essential and further readings and a series of activities, designed to enable students to test their knowledge and develop relevant skills. The module guide is supplemented each year with the preexam update, made available on the VLE.

The Laws Virtual Learning Environment The Laws VLE provides one centralised location where the following resources are provided: u

a module page with news and updates;

u

a complete version of the module guides;

u

pre-exam updates;

u

past examination papers and reports;

u

discussion forums where students can debate and interact with other students.

The Online Library The Online Library provides access to: u

the professional legal databases LexisLibrary and Westlaw;

u

cases and up-to-date statutes;

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key academic law journals;

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law reports;

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links to important websites.

Core text Students should refer to the following core texts and specific reading references are provided for this text in each chapter of the module guide: ¢

Fox, D., R. Munday, B. Soyer, A. Tettenborn and P. Turner Sealy and Hooley’s Commercial law: text, cases and materials. (Oxford: Oxford University Press, 2020) sixth edition [ISBN 9780198842149].

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ASSESSMENT Formative assessment is conducted through tasks in the module guide, which include self-assessment activities with feedback. The formative assessment will prepare students to reach the module learning outcomes tested in the summative assessment. Summative assessment is through a three hour and fifteen minute unseen examination. Students are required to answer three questions out of six. Please be aware that the format and mode of assessment may need to change in light of extraordinary events beyond our control, for example, an outbreak such as the coronavirus (COVID-19) pandemic. In the event of any change, students will be informed of any new assessment arrangements via the VLE.

Permitted materials Students are permitted to bring into the examination room the following: ¢

Core statutes on commercial & consumer law 2021–22 (Palgrave Macmillan).

1

Introduction

Contents Introduction

2

11

What is commercial law?

3

12

The function and ethos of commercial law

4

13

Learning outcomes for Commercial law

5

14

Approaching your study

6

15

Study skills

8

16

The examination

10

Reflect and review

12

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Introduction This module guide provides a structure for your study of commercial law. It gives an overview of the various topics of which this module is comprised and is a guide to the Essential and Further reading materials. It is not a substitute for those reading materials. You should work through each chapter and the associated readings and you should undertake the activities as a means of deepening your understanding of the subject. At the end of each chapter, you should pause to consider whether you have achieved the learning outcomes. While commercial law is based in contract law, it also includes elements of tort, equity and property law. The resources on which a commercial lawyer draws include legislation, cases and international agreements. This module, therefore, builds on knowledge acquired through your study of law and it develops your skills of analysis and synthesis. You should use a notebook or ring binder as you study this module. This should be used for recording answers to activities and making working notes. It is not the same as your Skills portfolio, which should contain the evidence that you are acquiring learning and legal skills. See Section 1.4.3 for more details.

Learning outcomes By the end of this chapter and the relevant readings, you should be able to: u

approach the study of commercial law in a systematic way

u

understand how this module guide is organised and the various elements of which it is comprised

u

understand how to develop your learning skills

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understand how to approach the examination.

Commercial law Chapter 1 Introduction

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1.1 What is commercial law? Commercial law is a dynamic and exciting area. It must be flexible in order to keep pace with the rapid changes in business and with the globalisation of markets. At the same time, it must deliver the certainty that business requires. Commercial law is a subject that is difficult to define, and, unlike in many jurisdictions, there is no code in English law (although, as will be seen, there are codifying statutes on particular aspects of commercial law). Commercial law could be defined very broadly to encompass all aspects of commercial life and so include the law of contract, property, trusts, company, agency, sale of goods, banking, intellectual property, competition, taxation and insurance. This module does not seek to cover all of these subjects. The object is to look at certain areas in order to acquire an understanding of the main themes, principles and practices of commercial law. This module is, therefore, organised around the contract of sale. In this it reflects the view of one leading writer, Professor Sir Roy Goode, who remarked that commercial law comprises ‘that branch of law which is concerned with rights and duties arising from the supply of goods and services in the way of trade’ (Goode, p.8 – see Section 1.4.1 below). The syllabus comprises: u

the law of personal property

u

the law of sale of goods

u