The right to reject for short delivery and termination

• Pages: 44-64
• Published date: 23 March 2012
• DOI: https://doi.org/10.1108/14770021211210687
• Date: 23 March 2012
• Author: Sean Thomas
• Subject Matter: Economics

The right to reject for short

delivery and termination

Sean Thomas

School of Law, University of Leicester, Leicester, UK

Abstract

Purpose – If a seller fails to deliver the correct quantity, the buyer may reject the goods in accordance

with the Sale of Goods Act 1979, section 30(1). The nature of this right to reject is unclear, and whether

breach by short delivery will suffice to terminate the contract is also unclear. The purpose of this paper

is to clarify this area of law.

Design/methodolo gy/approach – The focus is on the combined case-law and academic

commentary on the topic of short delivery, and the broader issue of termination.

Findings – The paper suggests that breach by short delivery does terminate the contract. It suggests

that the right to cure cannot provide an entirely satisfactory response for victims of short delivery. The

paper also proposes a reform of the Sale of Goods Act 1979 to take this into account.

Research limitations/implications – This research mainly focused on the current legal position.

Further research on the historical development of the rules on short delivery, which were crystallised

in the Sale of Goods Act 1893, will provide valuable insights into this area of law.

Practical implications – The proposal for reform could have a practical benefit in terms of

protecting buyers from the danger of short delivery, by providing them with a more secure remedy

than what appears to be currently available.

Originality/value – To the extent of the author’s knowledge, this is the first dedicated analysis of

short delivery in the literature.

Keywords United Kingdom,Legislation, Case law, Commercial law, Saleof goods, Contracts,

Termination,Rejection, Right to cure, Short delivery, Reform of the Lawof Sale

Paper type Research paper

A. Introduction

If a seller delivers the wrong quantity of goods to the buyer, the Sale of Goods Act 1979

(“SGA”) s 30(1) (references to sections will be to sections of the SGA unless otherwise

stated) provides that “the buyer may reject the goods”. With delivery engendering

confusion (Benjamin, 1868, p. 497) alongside commercial and judicial uncertainty over

the right to reject (Honnold, 1949, p. 457)[1], it is unfortunate that the Law Commissions

have vacillated over the relationship between the right to reject for short delivery and

termination (Law Commission and Scottish Law Commission, 1983, para. 6.27, 1987,

paras. 1.14, 6.17). Recent cases have either ignored s 30(1)[2] or deemed it irrelevant[3],or

damages were considered a sufficient remedy[4]. Yet the Law Commissions have

recently stated that s 30 was regarded “as a reasonable, sensible and logical set of rules to

deal with the wrong quantity of goods being delivered” (Law Com 317, para. 3.127).

The current issue and full text archive of this journal is available at

www.emeraldinsight.com/1477-0024.htm

A version of this article was presented at the Society of Legal Scholars Conference, at the

University of Cambridge, in September 2011. I would like to thank Dr George Zhou for

encouraging me to run with this rather strange idea, and Dr Camilla Andersen, Dr Lorna Gillies,

Dr Ruth Wadman and Professor Janet Ulph for putting up with my rather strange explanations

of why this area of law is interesting. The usual disclaimer applies.

JITLP

11,1

44

Journal of International Trade Law

and Policy

Vol. 11 No. 1, 2012

pp. 44-64

qEmerald Group Publishing Limited

1477-0024

DOI 10.1108/14770021211210687

So what is the true nature of the right to reject for short delivery under s 30(1)? Does a

short delivery terminate the contract? Is termination a necessary consequence of the

exercise of the right to reject? These questions may seem controversial: “Although

termination entails rejection, it does not logically follow that a buyer entitled to reject

goods is thereby entitled to or does terminate the contract” (Bridge, 2009, para. 10.43).

The relationship between rejection and termination in the law of sale is “neither clear nor

fully understood” (Bradgate and White, 1995, p. 54), but there is a connection between

them (Law Commission and Scottish Law Commission, 1987, paras. 4.9, 4.25). Building

on this, it is proposed that exercising the right to reject for short delivery necessitates

termination of the contract. It is accepted that there has been considerable terminological

imprecision bedevilling this area of law (Shea, 1979)[5], so for clarity “terminate” and

“termination” will be used to refer to the ending of a contract (Harder, 2009).

B. Short delivery

SGA s 30(1) states:

Where the seller delivers to the buyer a quantity of goods less than he contracted to sell, the

buyer may reject them, but if the buyer accepts the goods so delivered he must pay for them

at the contract rate.

As Beale (1980, p. 30) put it, “if the seller is not ready and willing to deliver the correct

quantity the buyer does not have to accept any of the goods”, though if the short

delivery was the fault of buyer then the seller is not liable[6]. The requisite delivery will

depend on the context[7], and the rejection must be clear and unequivocal[8]. Following

the logic (however undesirable) of Arcos v. Ronaasen & Son[9], s 30(1) will not excuse

the most minor of shortfalls (Bridge, 2009, paras. 6.45, 6.47, 2010, para. 8-045), although

it is subject to the de minimis principle, which of course turns on the particular

facts[10]. So the absence of a single suit in a contract for 62 suits and 48 jackets could

be fatal[11]. The recent introduction of s 30(2A) further limits s 30(1): if the seller proves

(s 30(2B)) that the shortfall is “so slight that it would be unreasonable” to reject then a

non-consumer buyer cannot reject. Such a shortfall must be both slight and

unreasonable (Peel, 2007, para. 17-032), and “the unreasonableness of the buyer’s action

is measured by the quantitative shortcoming and not by other aspects of the seller’s

conduct” (Bridge, 2009, para. 6.47). The change arguably favours the seller (Bradgate,

2000, p. 270), but an “unmeritorious or technical” rejection remains possible whilst

the “virtue of certainty” has been “undermined” (Peel, 2007, para. 18-097), and it is

probably correct that s 30(2A)’s limitation to non-consumer buyers “must add

something [...] but it is unlikely to stretch any appreciable distance beyond de minimis

limits” (Bridge, 2009, para. 47). Either way, the limitations of de minimis along with the

uncertainty of s 30(2A) clearly demonstrates the importance of accurate delivery.

As “the sellers cannot call upon the buyers to accept any greater or less quantity of

the article bargained for than the specified quantity”[12], s 31(1) states that “Unless

otherwise agreed, the buyer of goods is not bound to accept delivery thereof by

instalments[13].” It is essential to recognise the impact of this provision; without it a

short-delivering seller could simply avoid the thrust of s 30(1) by claiming that he is

delivering by instalments. Agreement to instalment delivery brings into play s 31(2),

which is “more tolerant of the seller’s quantitative [...] failings than [s 30(1)]” (Bridge,

2009, para. 6.41), and conflict between s 30(1) and s 31(2) will be resolved in favour

Right to reject for

short delivery

45