commercial law

Order Description
Commercial Law and Negotiation
ABC Ltd is a manufacturer of wood veneered panels as used in the production of caravans. On Monday, ABC Ltd agreed to supply Bendit Ltd, a distributor of such panels, with 250 oak veneered panels (each 2440 x 1220mm in size) from their remaining stock of 300, on their normal credit terms. It was agreed that ABC Ltd would deliver these panels by rail to Nottingham railway station for collection by Bendit Ltd on Friday.

On Thursday afternoon, Bendit Ltd received an e-mail from ABC Ltd informing it that exactly 250 oak veneered panels of the required dimensions had been loaded on board a train belonging to NottEast Railways and were now on their way to Nottingham. Bendit Ltd was also informed that Nott East Railways had been instructed to release the goods only upon the authority of ABC Ltd.

Oak veneered panels are currently in short supply and Bendit Ltd was aware that Carlton Ltd, a manufacturer and supplier of caravans, was keen to purchase whatever amount of oak veneered panels that it could. Therefore, shortly after receiving the e-mail from ABC Ltd, Bendit Ltd agreed to sell to Carlton Ltd “the 250 oak veneered panels (each 2440 x 1220mm in size) now in the process of being delivered by ABC Ltd to Bendit Ltd at Nottingham railway station.”

Early on Friday morning, ABC Ltd was advised by NottEast Railways that the oak veneered panels had arrived at Nottingham railway station. ABC Ltd duly authorised NottEast Railways to deliver the panels to Bendit Ltd which went to the station to collect them. However, when Bendit Ltd arrived it was discovered that thieves had broken into one of the containers and stolen 100 of the panels. This theft occurred shortly before ABC Ltd authorised NottEast Railways to deliver the goods to Bendit Ltd. The price of oak veneered panels is continuing to rise and Carlton Ltd is insisting upon taking delivery of the remaining 150 panels at the contract price. Bendit Ltd has itself agreed to accept delivery of the remaining 150 panels from ABC Ltd but now intends to sell these to another customer at a much higher price.

Carlton Ltd recently purchased a forklift truck from Steve, a local plant and machinery dealer. Carlton Ltd has now been contacted by the police as its title to the forklift is being disputed.

The forklift was originally owned by Peter, a builders’ merchant. Peter was downsizing his business and had therefore taken the forklift to Quentin, the owner of a local engineering business, asking Quentin to service the forklift and to see if he could find a potential purchaser willing to pay not less than £8,500 in cash. Quentin’s business generally services plant and machinery but does occasionally sell such plant and machinery both on its own behalf and on behalf of its customers. Roger saw the forklift at Quentin’s premises and agreed to buy it from Quentin for £8,000 once Quentin had serviced it. It was agreed that property in the forklift would not pass to Roger until the service had been completed and payment had been made.

Before Quentin serviced the forklift, he remembered that it should not have been sold for less than £8,500. Therefore, when Steve visited his premises and offered to pay £8,500 for the forklift, Quentin accepted a cheque from him for that amount and allowed him to take the forklift away. Unfortunately, Steve had forgotten that his bank account was temporarily overdrawn which meant that his cheque was dishonoured. Quentin informed Peter that the cheque had been dishonoured and Peter immediately contacted the police asking them to try to recover the forklift. It was after this that Steve sold the forklift to Carlton Ltd.

Carlton Ltd recently sold 10 used caravans, which it had taken in part-exchange deals, to a used caravan sales business owned by Eliza. Eliza’s business was being run by Will, one of her caravan repair staff, because Eliza was ill. Carlton Ltd had been surprised that Will was authorised to buy such an unusually large quantity of used caravans, but Will informed them that Eliza had asked him to buy as many as he could. Will also untruthfully said that he had specifically checked the position with Eliza and that she had expressly approved the purchase. When Carlton Ltd later tried to arrange delivery of the caravans, Eliza refused to accept them explaining that Will, who has now disappeared, had been expressly forbidden to buy any caravans on behalf of the business.

Carlton Ltd supplied a new caravan to Fahim on 31st January 2016 under a conditional sales contract providing for the price to be paid in six equal monthly instalments. Fahim immediately began to use the caravan for a six month holiday tour of Britain. Fahim paid the first three instalments on 29th February, 31st March and 30th April respectively but then reported that the caravan had a water leak.

With the agreement of Fahim, Carlton Ltd arranged for the caravan to be repaired on 4th May, returning it to Fahim with the work completed on 5th May. Fahim used the caravan for a further three weeks but then reported another water leak in a different location in the caravan. Carlton Ltd immediately offered to repair this but on 28th May Fahim returned the caravan to Carlton Ltd and demanded that they refund in full the three instalments which he had paid. The interior of the caravan is extremely worn such that, even once repaired, it is now worth only half of the original sale price.

Advise Carlton Ltd as to its respective rights and liabilities in the above circumstances.


SUBMISSION DEADLINE: 4.00p.m. on Friday 13th May 2016


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