Smith Meat Processors of Abbottown, Canada, contracted to supply Beef Importers PLC, of Manchester, England, with monthly shipments of sides of beef. The buyer from BI would attend at Canadian stockyards, and select cows that were then weighed and processed by SMP.
The standard form SMP contract provided for title to the beef to pass when the beef was loaded on ships in Toronto Harbour. In practice, once the live cows were weighed, on the basis of an industry formula, the BI buyer was given the bill of lading (ownership slip) to the prepared beef ahead of time, so that he could return quickly to England and pledge it as security for a loan to pay for the shipment.
On a particular shipment (five months into the one-year contract) the buyer had pledged the bill of lading, and the beef was in the course of transit by rail to the Harbour when the train derailed, causing the complete loss of the beef.
BI insisted that SMP send another shipment, and SMP sent BI an invoice demanding payment for "BI's beef."
Litigation resulted. Discuss the arguments of the parties.
BI will argue that the contract provided for title to pass on loading of the processed beef aboard ship in Toronto, and that the contract on its face should govern. The parties have expressly allocated the risk of loss under the contract, and therefore the Sale of Goods Act should not apply.
SMP will argue that the Sale of Goods Act should apply, that goods unascertained at the time of contract have been put into a deliverable state, and have been unconditionally appropriated to the contract by the seller with the implied assent of the buyer (the buyer pledged the ownership as security-an act consistent with ownership). This is a "Rule 5" based argument.
At this level of analysis, the result would be that a contractual provision by the parties would govern over the effect of the Act, and the loss would be borne by the seller. However, if the contract governs, just what is the actual contract? There is the standard form, which would put the loss at the seller's feet, but what of the practice of the parties?

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The Answer of Smith Meat Processors of Abbottown, Canada, contracted to supply Beef Importers PLC, of Manchester, England, with monthly shipments of sides of beef. The buyer from BI would attend at Canadian stockyards, and select cows that were then weighed and processed by SMP.
The standard form SMP contract provided for title to the beef to pass when the beef was loaded on ships in Toronto Harbour. In practice, once the live cows were weighed, on the basis of an industry formula, the BI buyer was given the bill of lading (ownership slip) to the prepared beef ahead of time, so that he could return quickly to England and pledge it as security for a loan to pay for the shipment.
On a particular shipment (five months into the one-year contract) the buyer had pledged the bill of lading, and the beef was in the course of transit by rail to the Harbour when the train derailed, causing the complete loss of the beef.
BI insisted that SMP send another shipment, and SMP sent BI an invoice demanding payment for "BI's beef."
Litigation resulted. Discuss the arguments of the parties.
BI will argue that the contract provided for title to pass on loading of the processed beef aboard ship in Toronto, and that the contract on its face should govern. The parties have expressly allocated the risk of loss under the contract, and therefore the Sale of Goods Act should not apply.
SMP will argue that the Sale of Goods Act should apply, that goods unascertained at the time of contract have been put into a deliverable state, and have been unconditionally appropriated to the contract by the seller with the implied assent of the buyer (the buyer pledged the ownership as security-an act consistent with ownership). This is a "Rule 5" based argument.
At this level of analysis, the result would be that a contractual provision by the parties would govern over the effect of the Act, and the loss would be borne by the seller. However, if the contract governs, just what is the actual contract? There is the standard form, which would put the loss at the seller's feet, but what of the practice of the parties?

Smith Meat Processors of Abbottown, Canada, Contracted to Supply Beef