Atari Corporation (UK) Ltd v The Electronics Boutique Stores (UK) Ltd
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE WALLER,LORD JUSTICE PHILLIPS,LORD JUSTICE AULD |
| Judgment Date | 15 July 1997 |
| Judgment citation (vLex) | [1997] EWCA Civ J0715-3 |
| Docket Number | No QBENI 97/0309/E |
| Court | Court of Appeal (Civil Division) |
| Date | 15 July 1997 |
[1997] EWCA Civ J0715-3
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM ORDER OF MR JUSTICE HOOPER
Royal Courts of Justice
Strand
London WC2
Lord Justice Auld
Lord Justice Phillips
Lord Justice Waller
No QBENI 97/0309/E
MR N UNDERHILL QC and MR M SHANKS (Instructed by Brookstreet Des Roches of Witney, Oxfordshire) appeared on behalf of the Appellant
MR G LEGGATT QC (Instructed by Barnett Alexander Chart of London) appeared on behalf of the Respondent
This is an appeal from a decision of Hooper J who upheld the decision of Master Foster granting summary judgment to the plaintiffs for the sum of £369,611.16.
The sum claimed by the plaintiff is the price of certain electronic computer games and hardware delivered to the defendants pursuant to orders made in August/October and November 1995. Details are conveniently set out in a schedule to the statement of claim. The first and largest order provided expressly for:
| Payment | 30th November 1995 |
| Full S.O.R. | until 31st Jan 1996" |
S.O.R. stood of course for Sale Or Return.
The arrangement for Sale Or Return was negotiated between the parties and the terms confirmed by two faxes which are at pages 42 and 43 of the bundle. There is some dispute about what precisely was agreed, and indeed there may be a dispute as to the admissibility of any agreement said to have been reached outside the strict confines of the orders placed having regard to the Defendants' terms of purchase. Suffice it to say that the plaintiffs will contend at any trial that Sale Or Return applied only to the original stocking order in which it was specifically referred to and possibly one other order in which express reference is made to Sale Or Return. They will say it did not apply to any other orders at all; and indeed, if a later order repeated an item the subject of the original stocking order they will wish to contend that those items delivered under the original stocking order lost the Sale Or Return element. The defendants contend that Sale Or Return was to apply to any "first" order for items, and that as regards orders repeating items the subject of the previous order, the agreement was that Sale Or Return would not apply to the items the subject of the repeat orders, but would continue to apply to the items the subject of the "stocking" order. In the result, the defendants accept that in relation to the contracts identified in the schedule to the statement of claim, there are three to which the Sale Or Return term does not apply, and it is to those that the plaintiffs' respondent's notice is applicable.
The original stocking order is the largest order, and accordingly it has been sensibly recognised that for summary judgment purposes, the disputes as to whether Sale Or Return applies to certain of the smaller orders, and as to whether some items, by virtue of repeat orders, lost their Sale Or Return element, raise triable issues. On the application for summary judgment the point argued by the plaintiffs has simply been that the defendants have in any event failed to give notice of rejection of any goods which they held on Sale Or Return.
As appears from the express terms of the first order which I have set out, it was the intention of the parties that payment would be made by 30th November 1995, albeit the defendants were to have the "full" right of Sale Or Return up until 31st January 1996. Furthermore, the defendants in fact confirmed their intention to pay, by fax dated 28th November 1995 (page 74), but in the result the defendants have only paid very limited sums. It is the defendants case that once the 1st December went by, and it was appreciated that the goods were not selling well, some arrangement was reached under which the defendants only paid for those goods which they in fact sold. This is disputed by the plaintiffs and is a matter again which could only be resolved at a trial. The defendants further say that they in fact paid for the goods that were sold, and identified in schedules supplied monthly to the plaintiffs those items that had been sold and those that had not. The defendants then wrote the letter on which this appeal turns which I should set out so far as material:
""A review of all formats within the Electronic Boutique chain has recently taken place and the outcome was that Atari Jaguar is to be no longer stocked within the chain. Our decision was made on performance, participation, gross profit earned from footage allocated to product, and general market analysis on the Jaguar format.All stores have been requested to return all Jaguar stock to our central warehouse and when this is all received we will submit to you a complete list of what you will need to raise RA (agreed to mean Return Authorisation) numbers against.
This decision falls in line with our current trading agreement."
The response from the plaintiffs was by fax dated 22nd January 1996, and so far as relevant read:
"On receipt of your fax we reviewed our files and have asked our solicitors to advise us, in particular about the sale or return arrangement. Our initial conclusion is that we believe that you have lost the right to return goods to us as you were in breach of contract by not settling the invoices relating to the initial order on the due date."
That was followed by a further fax of 25th January 1996 from the plaintiffs saying:-
"For your information we have had confirmation from our legal people that your non-payment does constitute a breach of the original agreement, but we are willing to take back the unsold inventories subject to the agreement of a restocking charge."
There was a suggestion, not pursued, that there might be some dispute on the admissibility of this last letter on the basis that it was really an offer to settle, but since it was quoted by the Judge, and since in any event it does in fact firm up the position taken in the previous letter, the lack of pursuit is quite understandable.
There were attempts to negotiate a compromise which failed and the 31st January went by. In the meanwhile neither side had taken any further steps. The defendants did not give any notice that they wished to try and collect any stock. The plaintiffs did not prepare any list identifying the goods to be returned. The date simply went by without any further step being taken by either party.
After the 31st January, and in particular by the affidavits on the summary judgment application, the point about failure to pay having deprived the defendants of their right to exercise the sale or return condition has not been pursued. The point argued before the Master and before the judge has simply been that the 19th January 1996 letter was not a notice of rejection because:-
(1) it postulated some future action being taken in order to exercise the right of rejection,
(2) it failed to describe the goods which were being rejected with sufficient specificity; and
(3) the defendants did not have the goods available when the notice was served.
In the affidavits it is said that the defendants even now may not be able to identify the goods they are seeking to return, and reliance is placed on some correspondence later in the year where the defendants purported to deliver schedules and then withdrew the same as inaccurate. It also appears that at some time in June 1995 the defendants may have sold some of the items, which, if their rejection was valid, they would accept was a conversion of those items. But it is common ground that we are not assisted in our task of construing the contractual provisions or identifying whether or not a valid rejection took place by reference to the later history.
Both parties commenced their arguments as to whether the defendants had successfully exercised their right under the term allowing for Sale Or Return by reference to Section 18 Rule 4 of the Sale of Goods Act 1893 which, so far as material, provides as follows:-
"Unless a different intention appears the following are rules for ascertaining the intention of the parties as to the time at which property in the goods is to pass to the buyer …
Rule 4—When goods are delivered to the buyer on approval or on sale or return or other similar terms the property therein passes to the buyer:-
(a) When he signifies his approval or acceptance to the seller or does any other act adopting the transaction;
(b) If he does not signify his approval or acceptance to the seller but retains the goods without giving notice of rejection, if a time has been fixed for the return of the goods, on the expiration of such time. …"
We were also referred to Benjamin on Sale 5—051 which deals with sale or return, and what Benjamin suggests constitutes a notice of rejection under Section 18 Rule 4. Authorities on the subject are sparse but the key sentence is:-
"It is probable (my emphasis) that any intimation to the seller which clearly demonstrates that the buyer does not wish to exercise his option to purchase will suffice, but it is open to the parties to agree that the buyer shall be entitled to reject only by returning the goods".
What that sentence demonstrates is that the starting point must be to construe the terms of the particular contract providing for Sale Or Return, and decide what in the particular agreement the parties mean by Sale or Return or, as in this case, "Full Sale Or Return until 31st January 1996". For example "full Sale Or Return until 31st January 1996" could be construed as requiring the actual physical return of the goods to the seller prior to 31st January 1996; alternatively, it could be construed as...
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