Commercial and Personal Property Law - Assignment Example

COMMERCIAL AND PROPERTY LAW Q I The first issue in the problem is who is en d to the hidden safe. Simply put, who is the owner of the hidden safe found in the conservatory. The second issue is what are the rights and liabilities of the parties who has the possession or whose possession of the hidden safe passed through. A. The ownership of the Hidden safe As per English Law, the property rights of a person over his land extend to the earth beneath the surface of the land and also to the air space above such surface.1 It is a well accepted principle that whenever goods or chattels of significant value - be it of historical, literary or artistic- exclusive ownership shall accrue to the owner of a private property where the goods or chattels were discovered.2 However, as a qualification, these goods or chattels must be hidden. Hidden means not conspicuous and ownership is unknown.3 Furthermore, discovery should be made accidentally. A good or chattel discovered, once well within the ambit or falling in these qualifications, is properly termed in law as a “treasure”.4 The rule on exclusive ownership of the hidden treasure will have to be modified if the person who discovered the hidden treasure is not a stranger or a trespasser in the property. If that person is not a stranger or his presence in the property is rightfully authorized, he gets half of the value of the hidden treasure.5 The conservatory in The Manor House belongs to Charles. That means the property is privately owned where the hidden safe whose ownership is unknown was accidentally discovered. Thus in light of the above discussion Charles, as the private owner, is entitled to the hidden safe. However, since Alex was the party who accidentally discovered the property, and therefore would be recognized as the “finder” of the treasure in the eyes of law,6 and happens to be rightfully present in property after he was engaged by Charles to demolish the conservatory in the garden, he is entitled to half of the hidden safe. Therefore it is amply clear that Both Charles and Alex are each entitled to half of the value of the hidden safe. B. Rights and Liabilities of Parties In this case, Don has trespassed into the property of Charles and has stolen the hidden safe. The Theft Act 1968 provides that:7 “A person is guilty of theft, if he dishonestly appropriates property belonging to another with the intention of permanently depriving the other of it.” Since Don, without either Charles’ or Alex’s permission took the hidden safe, whose intent was to permanently deprive the owners, he should be held liable for theft. The true ownership having been established in their favor, Charles and Alex can hold Don civilly and criminally liable for the hidden safe. B.1 Liability of Eric and Fred In English law a title to a piece of tangible property, whether goods or land, may be less than perfect. Our law respects possession, so that a person who acquires possession acquires a title which may be defended against all but a person who can prove a better title (i.e. a prior and continuing right to possession). This is elementary law and based on substantial authority,8 but its continuing force and validity is illustrated by the modern case of Parker v. British Airways Board.9 The plaintiff, Parker, found a gold bracelet on the floor of the executive lounge at Heathrow Airport, which was operated by the defendant Board. Parker was lawfully present in that lounge. He handed the bracelet to an employee of the Board, and asked that it be returned to him if the true owner was not found. Instead, the Board sold the bracelet for £850. In these proceedings Parker claimed that, by finding the bracelet, he had acquired a title to it which was superior to the Boards; by selling the bracelet the Board had therefore committed the tort of conversion against Parker and the Board was therefore liable to compensate him in damages amounting to £850 plus interest. The Court of Appeal upheld Parkers claim, because he had acquired possession of and therefore a title to the bracelet, and the Board could not establish that they had prior possession of, and therefore a superior title to, the bracelet. It follows that Parkers title would prevail over any later possessor of the bracelet, such as a jeweller to whom it was taken for valuation.10 Equally, Parker would have a good claim against the person who bought the bracelet from the Board: nemo dat quod non habet.11 The principle relating to transfer of title by a non-owner was succinctly laid down by Lord Denning as follows:12 In the development of law, two principles have striven for mastery. The first is for the protection of property: no one can give a better title than he himself possesses. The second is for the protection of commercial transaction: the person who takes in good faith and for value without notice should get a better title. In light of the above legal principle, it is clear that Eric cannot be deprived of the silver bracelet for he acted as an innocent purchaser for value paying Don £1000. He cannot be deprived of the property having legitimately taken the ownership of the bracelet. The same is true with Fred who innocently bought subsequently the bracelet from Eric. [II]: The issue in the second problem raised the liability of Jack when he entered Charles caravan and stole various items from it, including a TV and DVD player and speakers. What specific offence has Jack committed has to be resolved first in order to determine his liability. The second issue that will arise out of the given problem is Phil’s liability under the contractual obligation he has with Charles. Discussion The provisions of the Theft Act 1968 specifically provide:13 (1) A person is guilty of burglary if- (a) he enters any building or part of a building as a trespasser and with intent to commit any such offence as is mentioned in subsection (2) below; or (b) having entered into any building or part of a building as a trespasser he steals or attempts to steal anything in the building or that part of it or inflicts or attempts to inflict on any person therein any grievous bodily harm. (2) The offences referred to in subsection (1)(a) above are offences of stealing anything in the building or part of a building in question, of inflicting on any person therein any grievous bodily harm or raping any person therein, and of doing unlawful damage to the building or anything therein. (3) A person guilty of burglary shall on conviction on indictment be liable to imprisonment for a term not exceeding- (a) where the offence was committed in respect of a building or part of a building which is a dwelling, fourteen years; (b) in any other case, ten years. (4) References in subsection (1) and (2) above to a building, and the reference in subsection (3) above to a building which is a dwelling, shall apply also to an inhabited vehicle or vessel, and shall apply to any such vehicle or vessel at times when the person having a habitation in it is not there as well as at times when he is. It is clear from the facts of the case that the caravan was uninhabited by Charles when Jack entered the vehicle. This has been qualified by the fact that Jack entered it to steal anything within the vehicle which in the problem, were various items, including a TV and DVD player and speakers. As the entry of the caravan was established and that it was accompanied by the taking of the property mentioned, Jack should be made to answer for burglary and be meted out for corresponding penalties on burglary.14 As regards Phil, there is no liability that will attach to him out of the robbery committed by Jack. The contract entered into between Charles and Phil was that of Lease. As per the facts in the instant case, Charles was allowed to use Phil’s space for him to park the caravan. As the lessor in the lease contract, Phil’s only obligation was to let Charles make use of the space while rent was being paid to him. There is no other obligation for Phil but to allow Charles access to the space where he could park his caravan and nothing else. To take care for and guard the caravan is outside the ambit of Phil’s contractual obligation. This true in all contacts governing the parties, they are only bound by the limits of their contractual obligations.15 Hence, Phil has no liability to the burglary. It is enough that he complied with his obligation. Response Q: 2 (a) (i) In this case, Dave had sold the wooden chest to George before the commencement of bankruptcy. At the time of sale Dave was unaware of the £10,000 inside the secret compartment of the wooden chest. The issue now for consideration is whether George is obligated to return the said amount, and if so, who can validly raise the claim for it considering that Dave has become insolvent. It is well settled principle of contract that a buyer, who is aware of an interest in the property which the seller did not know, and had with reasonable diligence no means to know is obligated to communicate the same to the seller if such interest materially increases the value of the good.16 Also, the buyer is under a legal obligation to make payment for the treasure since English law does not allow a party to unjustly enrich himself. The principle of unjust enrichment requires that one party has been enriched by the receipt of a benefit and that this enrichment is at the expense of the other party. In the instant case the test is satisfied since the £10,000 was rightfully owned by Dave and George had, we may reasonably presume from the facts, concealed the fact at the time of sale. The only issue that now remains to be solved is whether Dave can have a claim on that amount, or whether the claim has passed to the trustee in bankruptcy. It is a well settled position of law that in case of an after acquired property of an undischarged bankrupt, whether real or personal, if the bankrupt has completed bona fide dealings for value with a third party before the trustee’s intervention, they hold good between the trustee and the third party,17 and the rights of the bankrupt in relation to the transaction are preserved even after the bankruptcy.18 (ii) & (iii): The issue in this problem is whether or not these two dispositions made by Dave of his property before he became insolvent will fall under the Bankruptcy Offenses in the Insolvency Act of 1986. Before any query may be discussed, it is imperative to have a highlight of the specific law governing offences under Insolvency Law of 1986:19 Non-disclosure (1) The bankrupt is guilty of an offence if— (a) he does not to the best of his knowledge and belief disclose all the property comprised in his estate to the official receiver or the trustee, or (b) he does not inform the official receiver or the trustee of any disposal of any property which but for the disposal would be so comprised, stating how, when, to whom and for what consideration the property was disposed of. (2) Subsection (1) (b) does not apply to any disposal in the ordinary course of a business carried on by the bankrupt or to any payment of the ordinary expenses of the bankrupt or his family. It is a well settled principle of law that a debtor commits an act of bankruptcy if in England or elsewhere he makes a fraudulent conveyance, gift, delivery or transfer of his property or of any part of it.20 To render an assignment fraudulent under the Bankruptcy laws there must be a fraudulent intention on the part of the debtor.21 Moral fraud is not necessary but there must be fraud upon creditors, that is to say, a design to prevent the distribution of the insolvent debtor’s property in accordance with the bankruptcy laws.22 Though the fraudulent intention need not be specifically proved, yet it is imperative that such intention should be deducible from the surrounding circumstances. From the facts of the case, it is amply clear that Dave had gifted the property to Hannah and Ian before the commencement of bankruptcy, and also that there was no intention to commit fraud on the creditors, at least from the facts that are available with us. Since there is no presumption of fraud,23 Dave cannot be said to have fraudulently disposed his property thereby committing an offence under the bankruptcy laws. Lastly, the issue is whether Ian can claim the painting once it is released from Jack’s gallery, or whether the trustee in bankruptcy will have claim over it. In this regard, the principle of law is that if before bankruptcy a person has executed a valid assignment of property, such us an interest under a will or intestacy, then whether the property falls into possession before or after bankruptcy, the assignee’s title is good as against the trustee in bankruptcy.24 In this case, even though the possession of the painting has not gone to Ian before Dave became insolvent, the interest in the same has been already assigned in his favour, and therefore, Ian shall have a valid claim over the painting as against the trustee in bankruptcy. Response Q: 2 (b) Whether Lionel, Ken and Mark would be prejudiced by Charles’ insolvency? The answer to the query is directly linked to the issue of title in cases where goods are sold and property passes to the buyer, but for some reason, the seller remains in possession. The question therefore is: if the seller becomes insolvent, can the buyer claim the goods by virtue of his property? The position of law is that as against the seller himself or a liquidator or receiver, the answer at common law is prima facie in the affirmative25 – that is, the buyer can claim the goods. It also appears that the buyer’s chances of obtaining equitable or specific relief seems greater if property has passed to him, and especially if the seller claims no possessory rights of any kind over the goods.26 A buyer’s right to goods of which he is undisputed owner will be specifically enforced against the seller who proposes to convert them and pay damages in lieu.27 In light of the above position of law, it is clear that Ken should be able to make a strong legal claim for specific performance of the contract, since Ken had paid Charles for his goods and therefore the ownership of the goods are vested in Ken. Charles is merely in possession of the same, and therefore Ken would be able to enforce the claim for delivery of the goods. It is amply clear that the same is applicable in case of Lionel. In the case of Mark, the position is slightly different. As stated above, the position of law is that once the goods are ascertained and identified, the property in them would pass to the buyer, since they are now at the buyer’s risk.28 However, if the goods are identified and price for the ascertained goods are not paid by the buyer these consequences may not follow.29 In the instant case, Mark has not identified the barrels of glue that he is purchase nor has Mark fulfilled his part of the contract by paying the price as fixed by the contract. Therefore, it appears that Mark’s interest in the transaction may be prejudiced by the insolvency of Charles. Supposing Charles had given a document to Mark stating, “I hold 100 barrels on trust for Mark,” the latter may be made answerable for the property once the property will be inventoried during the insolvency proceedings. The presumption is that Mark has the possession and custody of the property belonging to Charles. In case there was a delivery made, then both Ken and Lionel may be made to answer for the property. If the delivery especially has become a fraudulent disposition, such property will be recovered to form part of Charles’ remaining property in the proceeding and will constitute an offence. Response Q: 3 A. Whether Fred has acquired a legally valid title over the antique furniture? The general principle of law relating to transfer of goods by a non-owner is laid down in the Sale of Goods Act, 1979 as follows:30 Subject to this Act, where goods are sold by a person who is not their owner, and who does not sell them under the authority or with the consent of the owner, the buyer acquires no better title to the goods than the seller had, unless the owner of the goods is by his conduct precluded from denying the seller’s authority to sell. The second principle that relates to the protection of a person who buys in good faith and for value from a person who does not have the authority to sell that good was laid down by Lord Denning in the following words:31 In the development of law, two principles have striven for mastery. The first is for the protection of property: no one can give a better title than he himself possesses. The second is for the protection of commercial transaction: the person who takes in good faith and for value without notice should get a better title. In this case, however, we notice that Dom is a dealer in antique furniture (which means the ordinary course of his business is to buy and sell antique furniture) and therefore would fall within the meaning of the term ‘mercantile agent’ as defined by the Factors Act 1889.32 The Factors Act further provides that any sale made by the mercantile agent, when acting in the ordinary course of business of a mercantile agent, shall be valid if the buyer acts in good faith and is without notice of the agent’s lack of authority to make the sale.33 It may be noted that the purchaser from the mercantile agent will not be protected if the goods were entrusted to him for some purpose other than selling that good. However, if such a purpose is demonstrated the ultimate buyer will be protected under law. The law laid down by King’s Bench is instructive in this regard:34 The owner must consent to the agent having them for a purpose which is in some way or the other connected with his business as a mercantile agent. It may not be actually for sale. It may be for display, or to get offers, or merely to put it in his showroom; but there must be a consent to something of that kind before the owner can be deprived of his goods. [Emphasis added] In the instant case, Dom was instructed by Haris to get offers for his antique furniture and therefore the principle laid down in the above dictum is applicable. Therefore, it is sufficiently clear that Fred has acquired a valid title over the furniture sold to him by Dom. .B. Whether the legal title to the car still vests with Usman? The transaction between Usman and Louis is that of a contract to sell. In this case, there could be no transfer of ownership since a contract to sell partakes only the nature of an option to buy while ownership is reserved to the seller even delivery was already made. This case was never a contract of sale where ownership may vest with the seller upon delivery even without payment of the purchase price. In law, the resale of the goods would not be valid if the initial sale was void; however, the question of whether there was a valid sale concluded in the first place is determined by the intention of the parties as to the time at which the property in the goods pass to the buyer.35 Therefore, delivery of the goods or the payment of purchase price do not influence the issue of the passing of property from the seller to the buyer; what matters is the intention of the parties to pass the property from one party to the other party.36 In any event, the most important kind of condition which may need to be satisfied before property passes from one party is the condition as to the payment of price. Express terms may make the passing of property conditional on payment of the price even after delivery of the goods.37 Usman’s terms of the contract clearly and expressly declared that the car would be sold to Louis only on the payment of £5,000. Since this payment was never made by Louis, the property in the car could never have passed to Louis. Also, in this case Usman did not contract a sale with Louis but only entered a contract to sell the car. Hence, since there was no transfer of ownership, it remains with Usman. C. Whether Evan can preclude Todd from delivering the paintings to Clare? The outcome of this case hinges on the meaning of Section 8 of Factors Act, 1889, which reads: Where a person, having sold goods continues in possession of the goods….the delivery or transfer by that person of the goods…to any other person receiving the same in good faith and without notice of the previous sale, shall have the same effect as if the person making the delivery were expressly authorized by the owner of the goods to make the same. On the face of it the section appears to require that the goods should be delivered to the second buyer if he has to obtain a title binding on the first buyer. So if the Seller (S) sells the goods to B1, but retains possession of them, and then sells them again (whether rightfully or wrongfully is immaterial) to B2, but still retains possession of them, it seems that B2 obtains no title under this section, and B1 has a better claim. This position of law was laid down in Nicholson v. Harper.38 However, Nicholson v. Harper was recently rejected as bad law by the Australian High Court in a case concerning pari materia provisions of section 9 of Factors Act and section 25 (1) of Sale of Goods Act.39 The decision in this case recognized ‘constructive delivery’ where the physical possession remains unaltered, but the right to possession was transferred. So, if S sells goods to B1, and retains possession of them, and then sells them again to B2, although he may still retain the physical possession of the goods unaltered, there may then be a constructive delivery to B2, at least if B2 has an immediate right to possession. The section would then be satisfied and B2 would have a better claim than B1. As per the facts of our case, the second buyer, Ms. Clare, would be entitled to immediate possession of the paintings and therefore would be in the same position as B2 in the illustration above. In light of the position of law stated above, it is clear that as per the law pronounced by the Australian High Court, which rejected Nicholson, Clare would have a better title to the paintings than Evan. Reference: A. Statutes & Legislations 1). The Treasure Trove Act, 1878 2). Sale of Goods Act 1979 3). Insolvency Act 1986 4). The Theft Act, 1968 5). The Factors Act, 1889 B. Books & Treatises 6). Anson’s Law of Contract 12 (6th ed. 1998) 7). P.S. Atiyah, The Sale of Goods 280 (1995) 8). Ratanlal & Dhirajlal, Law of Torts 12 (G.P Singh Ed. 2000) 9). Neil Brodie, Historical And Social Perspectives On The Regulation Of The International Trade In Archaeological Objects: The Examples Of Greece And India 38 Vand. J. Transnatl L. 1051, 1059 (2005) C. Judicial Decisions 10). Cohen v. Mitchell (1890) 25 QBD 262 11). Cook v. Whellock (1890) 24 QBD 658; Buchan v. Hill (1888) WN 233 12). Armory v. Delamirie (1722) 1 Stra. 505 13). Parker v. British Airways Board [1982] Q.B. 1004 14). Bishopgate Motor Finance Corporation v. Transport Brakes Ltd [1949] 1 KB 332 15). Sturmey’s Trustee v. Sturmey (1912) 107 LT 718 16). Re Spackman ex parte Foley (1890) 24 QBD 728 at 737 17). Radcliffe v. Abbey Road and St. John’s Wood Permanent Building Society (1918) 87 LJ Ch 557 18). Dutton v. Morrison (1809) 17 Ves 193 19). Lind Industrial Finance Syndicate Ltd v. Lind [1915] 2 Ch 345 20). Redler Grain Silos Ltd v. BICC Ltd [1982] 1 Lloyd’s Rep 435 21). Healy v. Howlett & Sons [1917] 1 KB 337 22). Pearson v. Rose & Young [1951] 1 KB 275 23). Astley Industrial Trust v. Miller [1968] 2 All ER 36 24). Dennant v. Skinner & Collom [1948] 2 KB 164 25). Aluminium Industrie BV v. Romalpa Aluminium Ltd [1976] 1 WLR 676 26). Gamers Motor Centre Pty Ltd v. Natwest Wholesale Australia Pty Ltd [1987] 163 CLR 236 Read More