Question not purposes on the trade. From the situation,

Question 1

The issue is to determine the legal
position of Caroline Moore in relation to the items purchased from Kitchen
Supplies Limited (“KSL”). The contract between Caroline and KSL is the sale of
goods contract under Consumer Rights Act
2015 (“CRA2015”). According to S21,
the trader is a person who acts for the purpose related to their trade, business etc. and a consumer is an
individual who deals with the trader but
not purposes on the trade. From the
situation, it can be understood that it was a trader to consumer contract where
KSL is the trader who sold goods to the
consumer, Caroline.

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To determine the issue, Caroline needs to prove that the ownership of the goods
that she purchases had been passed to
her. If she couldn’t prove that, the ownership will not pass to her. Ownership
of goods means the general property of
the goods, not merely a special property2.
For the time when the ownership of goods is transferred, need to look at the
provision under the Sale of Goods Act
1979. There are three types of goods that Caroline had been purchased.

(i)                
A Large Hexa 300 Fridge Freezer (“the
Fridge”)

According to the order form, Caroline
was told that the fridge was the last available unit because this model had
been discontinued. Due to this, the fridge was specific goods. Specific goods were
understandable as a good identified and agreed on at the time a contract of
sale is made3
under S61(1)4.
For a property to be passed, the intention is important. When the parties
intend to transfer the specific or ascertained goods, the intention will need
to appear. However, to make sure it was a
clear intention, need to refer to the terms of the contract, conduct for the
parties together with the circumstances of the cases5.  

On the fact, Caroline had paid for
the fridge and by applying S176 in
this circumstance, the ownership of the fridge is deemed to be passed to Caroline
when both parties intend to do so. Nevertheless, the intention was still not
clear. From the question, it does not state the terms or any other conduct for
both parties. So, it does not fulfill the
requirement stated in S17(2)7. Presumed
that there is an intention, the contract between Caroline and KSL was an
unconditional contract for the sale of specific goods and it had been in a
deliverable state under S18 Rule 18.
Based on S61(5)9,
the deliverable state was defined as the
goods were in a condition that the buyer
would under the contract be bound to take delivery of the goods.

In the case of Underwood Ltd v Burgh Castle Brick and
Cement Syndicate 192210,
the machine was not in the deliverable state and it deemed not intended to pass.
In Caroline’s situation, it clearly shows that the fridge was in a deliverable
state because KSL had the exact quantity and agreed to deliver the fridge to
Caroline on 10 November. Therefore, the ownership of the fridge had passed to
Caroline when the contract was made.

Therefore, according to S18 Rule 111,
the property of the goods had been passed to Caroline when the contract is
made, and it doesn’t matter with the postponed of the delivery or payment12. Under
this circumstance, it strongly shows that the property of the fridge had been
pass to Caroline. Although KSL had gone into administration, the administrator does
need to deliver the fridge to Caroline. If the administrator couldn’t make it,
they need to refund Caroline for the amount that she had paid to KSL.

(ii)             
A stainless-steel sink (“the sink”)

For the sink, it does not fit the
definition of specific goods, therefore, the sink will be classified as
unascertained goods. When the goods are not identified and agreed on at the
time a contract of sale is made, it will consider as unascertained goods. This
was illustrated in the case of Kursell v Timber Operators13 and
Re Wait14. Unascertained
goods may be purely generic goods that defined by description only and it can
also be generic goods from identified bulk where the generic goods were from
the specific batch. In the situation, the
sink is the purely generic goods. Whether or not the property has passed, it needs to depend
on whether the goods have been ascertained and unconditionally appropriated to
the contract with Caroline.

In general, for the sale of unascertained
goods, the ownership of goods will only be pass to the buyer when the goods
being ascertained15
because no property can be passed from the seller to the buyer when it is still
impossible to tell which goods are
passing16.The
goods will be ascertained when appropriated to the contract (Re Wait17). If the goods had
been ascertained, it is important to know that whether there is clear intention
on the transfer of ownership as discussed
above together with the concern of appropriation as illustrated in the case of Re London Wine
Co (Shippers)18.
If there is no clear intention, S18 Rule
5(1)19
will need to be considered. It is to presume
that there are an intention and
unconditional appropriation contract (Carlos Federspiel & Co SA v Twigg & Co Ltd20) for
the sale of specific goods in a deliverable state.

As can be seen from the circumstances,
the abovementioned was unlikely to happen. This is because it clearly shows
that the sink was not ascertained and unconditional appropriation. Therefore, the
property of the sink will not transfer from KSL to Caroline and Caroline will
become an unsecured creditor.

(iii)           
A Mowlam Steam oven (“the oven”)

As per abovementioned discussion, the
oven was not fit the definition of specific goods as well, so, the oven will be
classified as unascertained good. Albeit the oven and the sink is the unascertained goods, but there is some difference between this two goods. It is an unascertained good from specific
bulk where it specifically mentions the location of the oven in the order form –
Shelf C of Zone A of KSL’s warehouse. According to S61(1)21,
the bulk was understandable as the collection
of goods which contained in a defined space or area and interchangeable with
any other goods therein of the same number or quantity.

As discussed
above, the ownership of the goods will only be transfer to the buyer unless the
goods being ascertained. In this situation, the oven was not an ascertained
goods (Re
London Wine Co (Shippers)22).
Nevertheless, subject to S20A23, although
the goods were not ascertained, the
ownership can still be transfer if the conditions stated in S20A(1)24 had
met. When the requirement had met, the pre-paying buyer of the goods which
remain unascertained but are part of the specific bulk may be able to assert
the title.

Meanwhile, according to S18 Rule 5(3)25, the ownership of the goods would
still need to transfer to the buyer when the specific quantity of the
unascertained goods in a deliverable state forming part of the bulk in the
contract had been reduced, the remaining goods are to be taken appropriated to
that contract at the time when the bulk is reduced, and the ownership will pass
to that buyer26.
Moreover, under S18 Rule 5(4)27,
it also applies to the single buyer who is
the only buyer to whom goods are then due out of the bulk.

On the fact, the oven was the goods
forming part of the specific bulk and Caroline had paid the amount of the oven
to KSL, she will become the owner in common of the specific bulk as stated in S20A(2)28 to
the extent of the amount she had paid for and would entitle to claim the oven
from the administrator. Consequently, the property would need to transfer to
Caroline under S18 Rule 5(3) & (4)29 which give statutory effect to the
common law doctrine of ascertainment by exhaustion (Karlshamns Oljefabriker v Eastport Navigation Corp
(The Elafi) 1982 1 All ER 20830).
 

Question 2

The issue is to determine the legal
rights and remedies of Caroline in relation to the app purchased by her from
BeeWarm Limited (“BL”). The contract between Caroline and BL is the sale of
goods contract in accordance to S5(1)31.
As per the discussion in Question 1, based on S232,
BL is the trader who sold the goods to Caroline
who is being the consumer pay for the
digital content. To determine the issue, Caroline needs to prove that BL had breached the terms of the contract
either expressly or impliedly. If she couldn’t prove that, it is difficult for
her to claim damages and/or remedies for
the breach.

As per the understanding, the app is
part of the digital content33.
According to S2(9)34,
digital content defined as the data which are produced and supplied in digital
form. The app was used to control the heating system, so, it was clearly
demonstrated in the above definition. From the above situation, it shows that
there is a contract between BL and Caroline which state under S3335.
For this act, it talks about the rights of a consumer when he or she had paid for the digital content or where it is
supplied free with the paid for the goods, services and other digital content. Hence,
BL might be breach due to the faulty of the app. But, BL can argue that it
might be the problem of the heating system. But there is an independent
engineer checked the heating system and confirm that it had been installed
correctly and its worked with another app. Therefore, BL was likely to be
breaches of the statutory rights under few section

Firstly, BL had breached S3436
of the unsatisfactory quality of the digital content.  This section is a term of the contract where
the quality of the digital content purchased by the consumer from the trader
must in a satisfactory quality and this section had mirror S937
and S1438 although
there not include ‘appearance and finish’
under S33(3)39. BL
can argue that this was not stated in the agreement that made with Caroline.
However, this section was an implied term. When BL breach this, Caroline has the right to claim for damages.

According to S33(2)40,
the quality of the digital content will be treated as satisfying if it meets the requirement that the reasonable person considers it as satisfactory quality. The court
had construed that the reasonable person is in the position of the buyer with
his knowledge41.
From the objective test under the case of Clegg v Andersson42,
LJ Hale state that “the test is whether a reasonable person would think the
goods satisfactory, taking into account their description, the price (if
relevant) and all other relevant circumstances”43. For
the objective test, it was about the objective comparison of the state of the
goods with the standard which a reasonable person would find the goods
acceptable.

On the fact, there was an
advertisement state that the app was compatible with all the heating system and
this app cost Caroline for £99. This is not a cheap app. Due to the objective
test, based on the advertisement and the price, the reasonable person will find
the goods reasonable because the price is
a standard for the reasonable person to consider the satisfactory of the app.
For a reasonable person, when the app was in a higher price, the standard of
them for the satisfactory quality will be higher as well44. They
will aspect that this app will be better compared
to the other cheaper app. Meanwhile, if it is not good, BL won’t advertise that
the app was applicable to all the heating system.

Secondly, BL also breaches the statutory right of S3545 where the digital content must fit for
the particular purpose and this section was similar to the provision stated in S1046. To
prove that BL had breached this section, Caroline
needs to show that there were knowledge and reliance involve in the
situation. As per stated in the case of Grant v Australian Knitting Mills47,
when the buyer makes known to the seller of the particular purpose for the
goods required either expressly or impliedly, the buyer will rely on the skill
or judgement of the seller, and the goods are of a description which it is in
the course of the seller’s business to supply, there is an implied condition
that the goods shall be reasonably fit for the purpose.

For digital content, the above breach
does lead to the breach of S3648
as well. It is about the statutory right of Caroline when the digital content
was not fit the description. According to S36(1)49, all
the contract of the digital content will be treated as including a term that it
will match any description given by the trader to the consumer. As per the understanding,
the description doesn’t mean must list
all the function out to the consumer, but the main function is mandatory. On
the fact, Caroline decides to purchase
the app from BL is because of their advertisement. Caroline relies on the knowledge given by BL (Priest v Last50) which
is the description from the advertisement, she suffers the loss.

Due to the abovementioned breaches, Caroline had the right to claim remedies
when the digital content was sold in an intangible form which supplied across
the network. Caroline can be claimed if
the app is faulty as discuss above i.e. not satisfied the quality, not fit the
purpose or description. According to S42(2)51, the
consumer has the right to repair and replacement and the right for a price
reduction if the digital content does not conform to the contract. When the
consumer has the right to repair and replacement, the trader must finish it
within a reasonable time and without causing any significant inconvenience to
the consumer. The trader needs to bear
any necessary costs of doing so. All of this was covered under S43(2)52. Nevertheless,
the reasonable time or significant inconvenience is to be determined based on the nature of the digital
content and the purpose of the digital content was obtained – S43(5)53.

From the situation, when Caroline
purchased the apps, she waived her right to withdraw from the sale, so she
cannot return the app for a refund. However, as the app is faulty, she can
claim for repair or replacement of the app under her right to the digital
content being of the satisfactory quality, not fit for the particular purposes
and description from BL. For Caroline’s situation, the app couldn’t be repaired but
can be updated. As a suggestion, BL
should response for identifying the fault
and issue an update for ensuring the quality of the app as a repair54.

Furthermore, Caroline does have the right to price reduction under S4455.
According to S44(1)56,
this is a right to require the trader to reduce the price to the consumer by an
appropriate amount. This was including the right to receive a refund for
anything already paid above the reduced amount57
and the reduction may be the full amount of the price as stated under S44(2)58.

On the fact, Caroline couldn’t get BL
when the app was not functioning for the heating system. Due to this, she had
no heating or hot water for a week. She couldn’t request a repair from BL and
it might over the reasonable time to repair or provide any replacement. This
had cause inconvenient to Caroline because she had to buy several electric
heaters costing £150 to warm the house and pay to the local swimming pool for a
shower. Therefore, according to S44(3)59,
Caroline does have the right to a price
reduction.

For the money (£150) that Caroline
spent on purchasing several electric
heaters to warm the house and pay to the local swimming pool for a shower, she
might unable to claim it from BL. This is because she does not have the right to claim for any other damages other than
the remedies stated abovementioned.

The final issue is due to the fault
of the app, Caroline suffers a loss on the delay of the building work and
estimate that this delay might cost her additional £1500 in building cost. If
she suffers loss, she can be claimed when
the digital content is a service supply
to Caroline. However, according to current law, it does not have a clear answer
whether the digital content is a good or
service60. But,
when the digital content is under the intangible
form, it might be a service61.

On the fact, when BL create the app,
the app will become a product. Once the app introduces to the public, it can consider
as a service. According to S48(1)62,
this section applies to the contract where trader supplies a service to a
consumer. Therefore, BL must perform this app with reasonable care and skill – S49(1)63.
But BL was not. BL had breached this
section because they didn’t issue any
update to their faulty app or giving any solution to Caroline when she faces
the issue. This show that BL does not exercise
reasonable skill and care for Caroline.

Caroline can require for a repeat
performance as stated under S5564.
This is a right that Caroline can require BL to perform the service again for conforming the contract. Meanwhile, BL must
provide it within a reasonable time, without causing any inconvenience to
Caroline and bear any costs incurred in doing so65. Unfortunately,
BL doesn’t make it within a reasonable time and cause inconvenience to her, she
entitles the price reduction – S5666.
Due to Caroline had pay the full amount
to BL, she would entitle to get her money back – S56(2)67.

In addition, based on S54(7)68,
Caroline had the right for other remedies such as claiming damages, seeking
specific performance, exercising a right to treat the contract as at an end
etc. from BL if and when BL breach the contract. Therefore, Caroline can claim the
additional cost of £1500 from BL due to their breach.

 

 

1 Consumer Rights Act 2015 (“CRA
2015”), s2

2 CRA 2015, s4(1)

3 Sale of Goods Act 1979 (“SGA
1979”), s61(1)

4 SGA 1979, s61(1)

5 SGA 1979, s17(2)

6 SGA 1979, s17

7 SGA 1979, s17(2)

8 SGA 1979, s18 Rule 1

9 SGA 1979, s61(5)

10 Underwood Ltd v Burgh Castle Brick
and Cement Syndicate 1922 1 KB 343

11 SGA 1979, s18 Rule 1

12 Ibid.

13 Kursell v Timber Operators 1927
1 K.B.298

14 Re Wait 1927 1 Ch 606

15 SGA 1979, s16

16 Paul Dobson & Rob Stokes, Commercial Law (8th edn,
Sweet & Maxwell 2012) 39

17 Re Wait (n12)

18 Re London Wine Co (Shippers)
1986 P.C.C 121

19 SGA 1979, s18 Rule 5(1)

20 Carlos Federspiel & Co SA v
Twigg & Co Ltd 1957 1 Llyods Rep 240

21 SGA 1979, s61(1)

22 Re London Wine Co (n18)

23 SGA 1979, s20A

24 SGA 1979, s20A(1)

25 SGA 1979, s18 Rule 5(3)

26
ibid

27 SGA 1979, s18 Rule 5(4)

28 SGA 1979, s20A(2)

29 SGA 1979, s18 Rule 5(3) & (4)

30 Karlshamns Oljefabriker v Eastport Navigation
Corp (The Elafi) 1982 1 All ER 208

31 CRA 2015, s5(1)

32 CRA 2015, s2

33 Department for Business Innovation
& Skills, Consumer Rights Act:
Digital Content (Guidance for Business, 2015)

34 CRA 2015, s2(9)

35 CRA 2015, s33(2)

36 CRA 2015, s34

37 CRA 2015, s9 – goods to be of
satisfactory quality

38 SGA 1979, s14 – implied terms
about satisfactory or fitness

39 CRA, 2015, s33(3)

40 CRA 2015, s 33(2)

41 Department for Business Innovation
& Skills, Consumer Rights Act:
Digital Content (Guidance for Business, 2015)

42 Clegg v Andersson 2003 EWCA Civ
320

43 Clegg v Andersson 2003 EWCA Civ
320 72 (LJ Hale)

44 Department for Business Innovation
& Skills, Consumer Rights Act:
Digital Content (Guidance for Business, 2015)

45 CRA 2015, s35

46 CRA 2015, s10

47 Grant v Australian Knitting Mills
1936 A.C. 85

48 CRA 2015, s36

49 CRA 2015, s36(1)

50 Priest v Last 1903 2 KB 148

51
CRA 2015, s42(2)

52
CRA 2015, s43(2)

53
CRA 2015, s43(5)

54 Department for Business Innovation
& Skills, Consumer Rights Act:
Digital Content (Guidance for Business, 2015)

55
CRA 2015, s44

56
CRA 2015, s44(1)

57
ibid

58
CRA 2015, s44(2)

59
CRA 2015, s44(3)

60
Clarice Marinho Martins de Castro, Chris Reed and Ruy de Queiroz, ‘Digital
Content and Cloud-based Contracts in Brazil and the European Union (2016)
accessed 19 Dec 2017

61
ibid

62
CRA 2015, s48(1)

63
CRA 2015, s49(1)

64
CRA 2015, s55

65
CRA 2015, s55(2)

66
CRA 2015, s56

67
CRA 2015, s56(2)

68
CRA 2015, s54(7)

x

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