Commercial Law

by Richard D. Currier; Richard William Hill; Samuel Williston

ILLUSTRATION.—This kind of appropriation can be very well illustrated by the case of a supposed sale of tobacco to a minor. A, a minor, lives in an outlying suburb of Boston where the sale of tobacco to a minor is not permitted. He buys goods of S. S. Pierce Company in Boston and wants to buy some cigars from them. He can buy cigars of them in Boston and send them out to his home, but the title must pass to him in Boston. If the title passes in the suburb it is an illegal sale by S. S. Pierce Company, and consequently they do not want to make it. Of course the buyer can go and get the goods and pay for them in Boston and send them himself to his residence. But suppose he sends an order by mail; if S. S. Pierce Company are willing to charge goods to him, giving him credit, they can send the goods by express, because on their shipment of the goods the title will pass and the buyer will become a debtor for the price of the goods in Boston; but they must not send the goods by their own wagon, as their carrying the goods themselves out to the buyer's residence leaves them in their possession until delivery, and the delivery does not take place until the goods are delivered from their wagon at his house. That would not do. Whereas if the goods are delivered to a public carrier in Boston the carrier would be the buyer's agent and title would pass in Boston.

THE SELLER MUST FOLLOW EXACTLY AUTHORITY GIVEN HIM.—Suppose the buyer specified that the goods are to be shipped by a given route, and the seller shipped them by a different route. Title would not pass then because the buyer had not authorized the seller to appropriate them to him, the buyer, in that way. It may be that the seller's way of sending them was better than that originally assented to by the buyer, but the seller, if he wishes to hold the buyer, as owner of the goods from the time of shipment, must get his approval of that better way. Still more important than the method of shipment is the character of the goods themselves. The seller cannot, by putting any goods on the train, transfer title. He must put on the train the very kind of goods which the buyer agreed to receive, and that will mean not simply, in the case supposed, that the goods must be shoes, but they must be merchantable shoes of the character and sizes which the buyer agreed to take. The goods must be properly packed and all usual precautions in regard to them taken. In so far as the original agreement specified what was to be done, those things must be done. In so far as the original agreement does not specify how the goods are to be shipped, or what shall be done in regard to them, the seller has discretion to do anything which is customary and proper for a careful business man.

SHIPMENT OF GOODS C. O. D.—There has been considerable litigation in regard to the effect of shipping goods C. O. D. Suppose goods were ordered and goods of the sort ordered were shipped in accordance with the directions in the order, but were marked C. O. D. Those letters mean, as you know, collect on delivery, and two possible explanations may be given of their effect. One, that the seller retains not only control of, but also title to, the goods until they are delivered and the price paid. According to that view the carrier is made the seller's agent, to hold the title to the goods and transfer it to the buyer when he pays for the goods. But the better view is that the carrier merely retains a hold on the goods, a lien on behalf of the seller, while title to the goods passes on shipment.

EFFECT OF THE FORM OF A BILL OF LADING.—One cannot speak of title passing or being retained on shipment of goods without referring to bills of lading, for the general rules which have been given must be qualified by this statement, that by means of a bill of lading the title may be at will retained or transferred (if the buyer has authorized a transfer). The proper way to indicate a transfer of title when goods are shipped is to have the buyer named as consignee in the bill of lading. A bill of lading is very much like a promissory note; the carrier promises to deliver the goods to somebody who is called the consignee, and who corresponds to the payee of a note. There is this further feature in a bill of lading: the carrier acknowledges receipt of the goods from the consignor, that is, the shipper, and the carrier promises to deliver them.

ILLUSTRATIONS.—Now, when S. S. Pierce Company decide to ship goods to a buyer, it may consign them to the buyer or it may consign them to itself; that is, the same person may be consignor and consignee. That is very common in business, in order that the shipper may retain title to the goods until he receives payment. He takes the bill of lading in his own name and then, generally, attaches a draft on the buyer of the goods, and sends the bill of lading and the draft together through a bank. The bank notifies the drawee of the draft, who is the man who has agreed to buy the goods, that the bill of lading with the draft are at the bank, and that the buyer may have the bill of lading when he pays the draft. The buyer pays the draft and gets the bill of lading, and then for the first time does he become the owner of the goods. On the other hand, if the shipper—S. S. Pierce Company—had consigned the goods directly to the buyer, the buyer would have become the owner of the goods on shipment, provided the buyer had authorized that shipment. The seller cannot, however, by naming a buyer consignee, make the buyer owner of any goods which he has not agreed to receive. So much for appropriation of the goods to the buyer by shipment. In another chapter fuller reference will be made to bills of lading as documents of title and as bank securities. In this connection they are referred to merely as indicating an intention to transfer or retain title as between buyer and seller.

IMPORTANCE OF DELIVERY IN SALES OF GOODS.—Title to chattel property, it has been said, may pass without delivery. This is true as between the parties, but as against creditors and third persons delivery is necessary. Suppose A sells a horse to B and does not deliver the horse, and A afterwards sells the horse to C and does deliver the horse to C. B comes around to C and says, "That is my horse. I paid A the full price." C may say, "I bought him in good faith. I thought it was A's horse. I have got him and I am going to keep him." C may keep him.

PLACE OF DELIVERY.—Certain contractual rights between the buyer and seller are implied from the nature of the bargain of sale. A seller is under an implied obligation not only to transfer title to the buyer, but to deliver possession to him. Where must the seller deliver possession? If the contract states the place, the terms of the contract decide that question. If the contract does not expressly state where the place is to be, the place of the seller's residence is the place where the seller is bound to deliver, unless the goods are too heavy for easy transportation, and in that case the place of delivery is the place where the goods are at the time of the bargain. That may be the seller's place of business, and it may not.

DELIVERY AND PAYMENT ARE CONCURRENT CONDITIONS.—Concurrently with the seller's duty to deliver possession, the buyer is under a duty to pay the price, unless the contract provides for a period of credit. The delivery and the payment of the price are, in the absence of contrary agreement, concurrent conditions. The seller must offer to deliver if he wants to get a right of action for the price, and the buyer must tender payment if he wants a right of action for the goods. The tender of price and delivery must be at the place where payment and delivery is due. It may be asked, how is the seller to tender the goods at the place delivery is due if that is the seller's place of business and the buyer does not appear? The answer is, that it is in effect a tender for the seller to have the goods in the place where they are to be delivered, he being ready and willing to deliver them. If the buyer does not come there the buyer must, nevertheless, pay the seller. By the seller's readiness to perform, at the place where performance is due, and deliver, if the buyer with his money is at the place where payment is due, there is in effect a tender.

RIGHT OF INSPECTION.—The buyer and seller have certain other implied rights and duties. A right which the buyer always has, in the absence of agreement to the contrary, is a right to inspect the goods, to see that he is getting what he bargained for, before he accepts title and pays the price. He may, however, waive this right of inspection; he may agree to pay the price without seeing what he is getting, and in modern business this is not uncommon. One sort of bargain frequently made contains this term: "Cash against bill of lading." That means the buyer is to pay the price of the goods on receiving the bill of lading. The bill of lading will usually reach him before the goods, and, therefore, before he has a chance to inspect; and by the terms of his bargain he has agreed to pay cash against the bill of lading and he must do so. Of course, if the goods when received turn out not to be what he bargained for, he has a right to sue for breach of contract or recovery of the price paid. But in the first place, when the bill of lading comes he has to assume that the goods are going to be right and pay for the bill of lading. Another case where a right of inspection is waived is where goods are sent C. O. D. You order goods to be sent in that way and the expressman brings them. You say you want to open the package and see if the goods are right. You will find the expressman will not let you. He will say, "No, you must pay for the sealed package," and until you do so, you will have no right to the possession of the goods. If the goods are not all right you have redress by suing the seller, but you must pay your money first.

WARRANTIES.—Another and most important right which the buyer has is the enforcement of warranties. Warranties of a chattel may be either express or implied. An express warranty is a promise or an obligation imposed by the law because of a representation which the seller has made in regard to the goods. The simplest form of warranty is where the seller says, "I warrant this horse is sound," or, "I warrant this piano will stay in tune for a year." These warranties are promises and are subject to the same rules as other promises. They are contracts for consideration, the consideration for the promise being in each case the purchase of the goods. But we have warranties which are not based on promises, strictly so called, and yet are express. A tries to sell a horse. He says the horse is perfectly sound, four years old, broken to harness, and has trotted a mile in three minutes. Those are in form representations rather than promises; they are assertions of fact, and when A makes them it is possible he does not understand that he is binding himself for the truth of his statements; and yet if they are made as positive statements of fact, the seller is held to warrant the truth of those statements.