Sale or Return Contracts: Shedding a Little Light
| Date | 01 May 1998 |
| DOI | http://doi.org/10.1111/1468-2230.00154 |
| Author | John N. Adams |
| Published date | 01 May 1998 |
particular sphere. His is also a judgment that very clearly demonstrates the judicial
process in theoretical action.
On a strictly doctrinal level, it is clear that the concept of constant supervision
continues to constitute a major obstacle to the grant of specific performance in the
context of continuous acts (such as the running of a business). Its contours as well
as underlying foundations have nevertheless been thoroughly explored, clarified
and even reshaped, but, consistent with the pragmatic cast of adjudication, the door
has been left slightly ajar — to be firmly pushed open should the need arise.
92
It is
ironic (yet clearly praiseworthy) that such pragmatism recognises that, on
occasion, moral criteria (by and large feared as ‘messy’
93
) will both inform and
infuse the judicial process in order that justice might prevail.
Sale or Return Contracts: Shedding a Little Light
John N. Adams*
There is very little authority on ‘sale or return’ transactions. The Court of Appeal
decision in Atari Corporation vElectronics Boutique Stores (UK) Ltd
1
is welcome
as it shines a little light into this dark corner. It deals with the question of what a
‘buyer’ who decides to ‘reject’ the goods must do in order to exercise its right of
‘rejection’. I have argued elsewhere
2
that sales on approval should be distinguished
from sale or return transactions. Briefly, the difference is that ‘sales on approval’
are in fact sales subject to a right of rescission,
3
whereas ‘sale or return’
transactions are not at the outset sales: they only become contracts of sale in the
circumstance set out in section 18 rule 4 of the Sale of Goods Act 1979.
4
Sale or
return transactions are primarily a method of financing inventory.
5
They are akin to
requirements contracts in that in both cases the supplier carries the cost of unsold
goods, but differ from requirements contracts in that any contract of sale is
preceded by a contract of bailment under which the property in the goods can pass
to the ‘buyer’ or a third party in certain circumstances. The analysis by the Court of
Appeal in Atari was concerned with what those circumstances are.
The facts
The plaintiffs in this case had been awarded summary judgment for the price of
some electronic computer games and hardware delivered to the defendants
pursuant to orders received from the defendants. The terms of the first and largest
order provided: ‘Payment — 30 November 1995. Full S.O.R. until 31 Jan 1996’.
92 See the main text accompanying nn 47–48, above.
93 And see n 68 above.
* Faculty of Law, University of Sheffield.
2 J.N. Adams (ed.) Essays for Clive Schmitthoff (Abingdon, Oxon: Professional Books, 1983) p 1.
3 See Head vTattersall (1871) 7 Ex 7.
4 Set out below.
5 See Uniform Commercial Code Art 2-326.
The Modern Law Review [Vol. 61
432 The Modern Law Review Limited 1998
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