week 6 - emma

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Macquarie University *

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471

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Law

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May 31, 2024

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docx

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Topic 6 Sale of Goods II 1. Discuss the High Court’s decision in and the outcome of Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (2000) 202 CLR 588 The High Court’s decision in Associated Alloys has authoritatively established for Australia the basic principle that, where the contracting parties specifically state in their contract that they intend to create a trust for the benefit of the seller , as opposed to creating a charge in favour of the seller, a court will not transmute the parties’ expression of an intention to create a trust into an intention on their part to create a charge, unless there is something else in their contract or in its surrounding circumstances to indicate that they are nevertheless intending to create a charge. I.e., The Associated Alloys case ruling established for Australia the basic principle that: When parties in a contract clearly say they're making a trust to benefit the seller (not just giving the seller a right), a court won't change that to a right for the seller, unless the contract or the situation shows they actually meant to give a right instead of a trust. Background of the Case The case of Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (2000) 202 CLR 588 is a significant decision by the High Court of Australia. It involved a dispute over the interpretation of the Corporations Law, specifically the provisions relating to the winding up of companies and the rights of creditors. High Court's Decision The High Court's decision in this case was primarily concerned with the interpretation of section 433 of the Corporations Law. This section provides that, in a winding up in insolvency, the assets of the company are to be distributed to the creditors in a particular order. The High Court held that the assets of the company should be distributed in accordance with the order set out in section 433. This meant that the secured creditors (those with a charge over the company's assets) were to be paid first, followed by the unsecured creditors. Outcome of the Case The outcome of the case was that Associated Alloys Pty Ltd, as a secured creditor, was entitled to be paid out of the assets of ACN 001 452 106 Pty Ltd before the unsecured creditors. This was a significant decision as it clarified the rights of secured creditors in a winding up in insolvency. Significance of the Decision
The decision in Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (2000) 202 CLR 588 has had a significant impact on the interpretation of the Corporations Law. It has clarified the rights of secured creditors in a winding up in insolvency, and has provided guidance for future cases involving similar issues. In conclusion, the High Court's decision in this case has had a significant impact on the interpretation of the Corporations Law and the rights of creditors in a winding up in insolvency. It has clarified the order in which assets are to be distributed in a winding up, and has provided guidance for future cases involving similar issues. ??Commissioner of Stamp Duties ??RAMAPLHA CLAUSE 2. What is a mercantile agent’? (See s 3 Factors (Mercantile Agents) Act 1923 NSW and in what circumstances will a sale by a mercantile agent bind the true owner of goods. A "mercantile agent" = someone in business who can sell or use goods as security for someone else . If they're allowed by the real owner or have the goods with permission, and they sell or use them in a fair deal , the owner is bound by the transaction . This is to protect honest buyers and balance the interests of everyone involved. They operate as intermediaries in the buying and selling of goods, and they play a role in facilitating trade transactions. The circumstances under which a sale by a mercantile agent will bind the true owner of goods (SECTION 5): 1. Authority (to sell) : If the mercantile agent is authorised by the true owner to sell or pledge the goods , the sale or pledge made by the agent will bind the true owner to the transaction. This means that the buyer or pledgee can enforce their rights against the true owner. 2. Goods in Possession : If the mercantile agent has possession of the goods, with the owner's consent, and sells or pledges them to a buyer or pledgee who acts in good faith and without notice of any irregularities, the transaction will bind the true owner. This is based on the principle that the true owner's actions (giving possession to the agent) can create apparent authority for the agent to deal with the goods. 3. Buyer in Good Faith : If a buyer purchases the goods from the mercantile agent in good faith and without notice that the agent According to S 3 of the Factors (Mercantile Agents) Act 1923 NSW, a mercantile agent is defined as: "A mercantile agent is a person who, in the customary course of their business as such an agent, has authority either to sell goods, or to consign goods for the purpose of sale, or to buy goods, or to raise
lacks proper authority or that there is any defect in the agent's title , the buyer's rights will be protected, and the sale will bind the true owner. 4. Document of Title : If the agent has a document of title to the goods, they can transfer a good title to a third party. 3. Problem Question: Kevin Arnold always dreamed of buying an electric scooter, called the T- 1000. He saw a navy blue model for $1,500 from a bike shop called Speed Wheels. The description on the side of the T-1000 scooter read “scooter comes with night lights in red and blue”. Kevin went to the Sydney CBD shop of Speed Wheels, and paid $1500 to Gerry, the owner of Speed Wheels for the navy blue T-1000 scooter (‘the scooter’). Kevin was most pleased to obtain the scooter, as it was the only one of the specific T-1000 models left in stock at the shop. Gerry informed Kevin he would deliver the scooter to Kevin’s house at the end of the week. Kevin then left, eagerly awaiting the delivery of the scooter at the end of the week. Running late, Gerry left to attend a COVID-19 booster vaccination appointment in a hurry and resolved to put the scooter in the storeroom at the back of the shop. During Gerry’s absence, however, Iris came into the shop. Leo, an employee of Gerry with full authority to operate the shop, saw the scooter at the back of the storeroom and when Iris inquired about the scooter she had seen advertised online, Leo promptly sold the scooter to Iris for $1500 on Gerry’s behalf. Assume the parties live in New South Wales. Who has the strongest claim over the scooter? Issue : Whether Kevin Arnold, who paid for the scooter but had not yet received it, or Iris, who bought the scooter from Leo during Gerry's absence, possesses the strongest claim. Rule : In NSW, the Sale of Goods Act and the principles of agency and authority guide cases involving the sale of goods and the authority of agents to act on behalf of their principals. Application/Law : Kevin entered into a contractual agreement to purchase the \ scooter from Speed Wheels for $1,500 this arrangement constitutes a valid contract as it involves mutual consideration (Kevin's payment of $1,500 and the scooter's purchase) o The elements of offer, acceptance, and consideration are evident in this agreement. Gerry (owner of Speed Wheels) communicated his intention to deliver the scooter to Kevin's residence this implied promise to fulfill the contract created a legitimate expectation on Kevin's part to receive the scooter as agreed upon. However, during Gerry's absence due to a COVID-19 vaccination appointment, Leo, (an employee of Gerry with full authority to
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