Commercial Law

Commercial Law

This innovative textbook examines commercial law and the social and political

context in which it develops. Topical examples, such as funding for terrorism,

demonstrate this fast-moving field’s relevance to today’s concerns. This wide￾ranging subject is set within a clear structure, with part and chapter introduc￾tions setting out the student’s course of study. Recommendations for further

reading at the end of every chapter point the reader to important sources for

advanced study, and revision questions encourage understanding. The exten￾sive coverage and detailed commentary has been extensively market tested

to ensure that the contents are aligned with the needs of university courses in

commercial law.

Nicholas Ryder is an associate professor in law at the University of the West of

England, Bristol. He is currently Director of the Commercial Law Research

Unit and co-convener for the Banking and Finance Stream for the Society of

Legal Scholars.

Margaret Griffiths is Professor Emeritus at the University of Glamorgan. She is a

specialist in consumer law, having taught and researched the area for over thirty

years.

Lachmi Singh is a senior lecturer in law at the University of the West of England

Bristol, where she specialises in contract law, international trade and carriage of

goods by sea.

The authors discuss why Commercial Law: Principles and Policy is required

reading at www.cambridge.org/commerciallaw

Follow the authors on Twitter at @DrNicRyder; @LachmiSingh;

@ProfMGriffiths

Commercial Law

Principles and Policy

Nicholas Ryder

Margaret Griffiths

L achmi Singh

CAMBRIDGE UNIVERSITY PRESS

Cambridge, New York, Melbourne, Madrid, Cape Town,

Singapore, São Paulo, Delhi, Mexico City

Cambridge University Press

The Edinburgh Building, Cambridge CB2 8RU, UK

Published in the United States of America by Cambridge University Press, New York

www.cambridge.org

Information on this title: www.cambridge.org/9780521760645

© Nicholas Ryder, Margaret Griffiths and Lachmi Singh 2012

This publication is in copyright. Subject to statutory exception

and to the provisions of relevant collective licensing agreements,

no reproduction of any part may take place without the written

permission of Cambridge University Press.

First published 2012

Printed in the United Kingdom at the University Press, Cambridge

A catalogue record for this publication is available from the British Library

Library of Congress Cataloguing in Publication data

Ryder, Nicholas.

Commercial law: principles and policy / Nicholas Ryder, Margaret Griffiths, Lachmi Singh.

p. cm.

Includes bibliographical references and index.

ISBN 978-0-521-76064-5 (hardback) – ISBN 978-0-521-75802-4 (pbk.)

1. Commercial law – England.â•…I. Griffiths, Margaret.â•…II. Singh, Lachmi.â•…III. Title.

KD1629.R93 2012

346.4207–dc23â•…â•…â•…2012007319

ISBN 978-0-521-76064-5 Hardback

ISBN 978-0-521-75802-4 Paperback

Cambridge University Press has no responsibility for the persistence or

accuracy of URLs for external or third-party internet websites referred to in

this publication, and does not guarantee that any content on such websites is,

or will remain, accurate or appropriate.

Contents

Preface page xiii

List of abbreviations xv

Table of statutory provisions xvii

Table of cases xlvii

Part 1 Agency 1

Introduction 1

Part 1 Chapter 1 Agency: an introduction 3

1â•…Introduction 3

2 What is agency? 3

3 Nature and characteristics of agency 6

4 The different types of agency 8

5 Conclusion 13

6 Recommended reading 13

Part 1 Chapter 2â•…The authority of an agent 14

1â•…Introduction 14

2 The authority of an agent 14

3â•…Agency by ratification 21

4â•…Agency of necessity 25

5 Conclusion 26

6 Recommended reading 26

Part 1 Chapter 3 Relations between a principal and agent 28

1â•…Introduction 28

2 Duties of an agent 28

3 Rights of an agent 43

4 Commercial agents and principals 47

5 Disclosed agency 49

6 Undisclosed agency 52

7 Termination of agency 54

8 Recommended reading 58

vi Contents

Part 2 Sale of Goods and Services 59

Introduction 59

Part 2 Chapter 1 Sale of goods policy 61

1â•…Introduction 61

2 Background 62

3 Development of the sale of goods 62

4 Equality of bargaining power: non-consumers and consumers 65

5â•…Impact of the European Union 69

6 Contract of sale 71

7 Contracts for non-monetary consideration 72

8 Contracts for the transfer of property or possession 73

9 Recommended reading 77

Part 2 Chapter 2â•…The implied conditions in sale of goods contracts 78

1â•…Introduction 78

2 Background 79

3 Sale of Goods Act 1979, section 12: the right to sell 80

4 Sale of Goods Act 1979, section 13: compliance with description 85

5 Sale of Goods Act 1979, section 14(2): satisfactory quality 91

6 Sale of Goods Act 1979, section 14(3): fitness for purpose 102

7 Sale of Goods Act 1979, section 15: sale by sample 105

8 Exclusion and limitation of liability 106

9â•…Acceptance 107

10 Remedies 110

11 Recommended reading 112

Part 2 Chapter 3â•…The passage of title, delivery and payment 114

1â•…Introduction 114

2 Background to the passage of property and risk 115

3 Rules governing the passage of property 115

4 Passage of risk 125

5 The nemo dat exceptions 127

6 Delivery and payment 133

7 Remedies 136

8 Recommended reading 143

Part 2 Chapter 4â•…The supply of goods and services 144

1â•…Introduction 144

2 Background 145

3 Provision of Services Regulations 2009 146

4 Supply of Goods and Services Act 1982 154

5 Recommended reading 164

vii Contents

Part 2 Chapter 5â•…E-commerce and distance selling 165

1â•…Introduction 165

2 Background 165

3 Electronic Commerce (EC Directive) Regulations 2002 166

4 Distance selling 173

5 Recommended Reading 180

Part 3 International Trade and Sales 181

Introduction 181

Part 3 Chapter 1 Standard trade terms 183

1â•…Introduction 183

2 CIF contracts 183

3 FOB contracts 192

4 Ex Works 195

5 FAS contracts 196

6 Conclusion 196

7 Recommended reading 196

Part 3 Chapter 2â•…The Vienna Convention on the International

Sale of Goods 1980 (CISG) 197

1â•…Introduction and background 197

2 Structure and scope 198

3 UNIDROIT Principles of International Commercial Contracts 212

4 Conclusion 213

5 Recommended reading 213

Part 3 Chapter 3 Payment in international sales 215

1â•…Introduction and background 215

2â•…Open account 215

3 Bills of exchange 216

4 Documentary collections 217

5â•…Introduction to letters of credit 217

6 Factoring 226

7 Forfaiting 228

8 Conclusion 229

9 Recommended reading 229

Part 3 Chapter 4 Carriage of goods by sea 231

1â•…Introduction 231

2 Hague and Hague-Visby Rules 234

3 Charterparties 247

4 Time charterparty 256

viii Contents

5 Common law obligations of the shipper 259

6 Common law obligations of the carrier 263

7 Bills of lading 265

8 Electronic bills of lading 268

9 Conclusion 268

10 Recommended reading 268

Part 4 Tortious Liability for Defective Products 271

Introduction 271

Part 4 Chapter 1 Negligence and the rise of product liability 273

1â•…Introduction 273

2 Background 274

3 Development of negligence 275

4 The move to strict liability 280

5 Types of defect 281

6 Developments in strict liability 284

7 Recommended reading 296

Part 4 Chapter 2 Product Liability under the Consumer

Protection Act 1987 298

1â•…Introduction 298

2 Personnel 299

3 Meaning of ‘product’ 305

4 Defectiveness 307

5 Defences 319

6 Contributory negligence 327

7 Recoverable damage 328

8 Limitations on liability 330

9 Recommended reading 332

Part 5 Unfair Commercial Practices 333

Introduction 333

Part 5 Chapter 1 Policy on unfair commercial practices 335

1â•…Introduction 335

2 Background 336

3 Enforcement strategy 338

4 Criminal law controls 339

5 Civil law enforcement 344

6 Recommended reading 348

ix Contents

Part 5 Chapter 2â•…The Consumer Protection from Unfair Trading

Regulations 2008 350

1â•…Introduction 350

2 Scope of the 2008 Regulations 351

3 Prohibition against unfair commercial practices 357

4 Codes of practice 360

5 Misleading actions 362

6 Misleading omissions 372

7â•…Aggressive commercial practices 375

8 Commercial practices which are automatically unfair 379

9â•…Offences 391

10 Recommended reading 392

Part 5 Chapter 3â•…Business protection from misleading marketing 393

1â•…Introduction 393

2 Background 394

3 Controls over misleading advertising 394

4 Comparative advertising 399

5 Promotion of misleading and comparative advertising 402

6 Recommended reading 403

Part 6 Banking and Finance Law 405

Introduction 405

Part 6 Chapter 1 Government policy 407

1â•…Introduction 407

2 History of banking regulation: early policy initiatives 407

3 New Labour and a new policy 410

4 The Financial Services Authority 422

5 The Coalition government 436

6 Conclusion 437

7 Recommended reading 438

Part 6 Chapter 2â•…Banking and finance law 439

1â•…Introduction 439

2 What is a bank? 439

3 What is a customer? 442

4 Bank accounts 444

5 Cheques 449

6 Payment cards 451

7 Banker’s duty of confidentiality 454

8 Banking Conduct Regime 457

x Contents

9 Payment Services Regulations 2009 459

10 Conclusion 460

11 Recommended reading 461

Part 6 Chapter 3â•…Banking regulation 462

1â•…Introduction 462

2 European banking regulation 462

3 The Financial Services Authority 466

4 Financial Services Compensation Scheme 473

5 Financial Ombudsman Scheme 473

6 Financial Services and Markets Tribunal 473

7 The Bank of England 474

8 Bank insolvency 475

9â•…Illicit finance 477

10 Conclusion 492

11 Recommended reading 493

Part 7 Consumer Credit 495

Introduction 495

Part 7 Chapter 1â•…The government’s policy towards consumer credit 497

1â•…Introduction 497

2 Evolution of the consumer credit market 498

3 Consumer debt, financial exclusion and over-indebtedness 501

4â•…Irresponsible lending 505

5 Regulation of irresponsible lending 506

6â•…Irresponsible borrowing 508

7â•…Ineffective legislative protection for consumers 510

8â•…A change of policy 514

9 Lessons from the United States 518

10 Conclusion 519

11 Recommended reading 520

Part 7 Chapter 2â•…The Consumer Credit Act 1974 522

1â•…Introduction 522

2 Crowther Committee on Consumer Credit 523

3 Consumer Credit Act 1974 524

4 Formalities 531

5 Cancellation of agreements 532

6 Pre- and post-contract information 532

7 Documentation of credit and hire agreements 535

8â•… Matters arising during the currency of credit

or hire agreements 535

xi Contents 9 Credit advertising 536

10 Credit licensing 539

11 Unfairness test 544

12â•…Other powers of the court 550

13 Financial

Ombudsman Service 550

14 Enforcement 552

15 Consumer Credit Directive 554

16 Conclusion 557

17 Recommended reading 557

Bibliography 559 Index 581

The principal objective of this book is to provide a detailed analytical overview

of the vast array of areas of commercial law and the policies that lie behind these

areas of law. The book is divided into seven parts and has been written with the

relevant policies in mind. Part 1 of the book deals with one of the most trad￾itional aspects of commercial law, the law of agency. This part is divided into

three chapters and provides a detailed review of the scope of an agent’s author￾ity, the obligations owed by a principal to an agent and the Commercial Agency

Regulations 1993. The second part of the book deals with another central tenant

of the commercial law syllabus, the sale of goods. This is divided into five parts

and considers such topics as the historical development and policy underlying

the sale of goods, before addressing the integral areas of the implied conditions

in the sale of goods, and the passage of title to goods combined with delivery

and payment. The last two chapters address the provisions of the supply of

goods and services and finally the rise of e-commerce. The third part of the

book deals with international trade and sales law. In particular, it concentrates

on standard trade terms, the Vienna Convention on the International Sale of

Goods, payment in international sales and carriage of goods by sea. Part four

looks at tortious liability for defective products, dealing initially with the law

of negligence and the rise of product liability and thereafter looking in detail at

the provisions of the Consumer Protection Act 1987. The next part of the book

consists of three chapters looking at the issue of unfair commercial practices,

which has seen a major reform of the previous piecemeal approach towards

criminal liability for goods and services. The first chapter looks at the policy

underlying the reforms and the role of the European Union in this area. The

second chapter considers in detail the provisions of the Consumer Protection

from Unfair Trading Regulations 2008, which have adopted a more holistic

approach to the entire issue of the liability of traders for goods and services.

The final chapter addresses the Business Protection from Misleading Marketing

Regulations 2008 and the controls they exercise over misleading and compara￾tive advertising.

As set out above, this book deals with the traditional areas of commercial

law, including the law of agency and the sale of goods. However, as there is an

artificial divide between consumer law and commercial law, this book also

Preface