Sect. 62.

Warranty.

The definition is only a primâ facie one, because there may be a mixed case, namely, when there is a contract for the sale of an unascertained portion of a larger ascertained quantity of goods. Suppose a man having a hundred dozen of a particular brand of champagne in his cellar, agrees to sell twenty dozen of the champagne of that brand" now in my cellar." For some purposes this would be regarded as a contract for specific goods, while for other purposes it would be regarded as a contract for the sale of unascertained goods. The property in the wine would not pass till the twenty dozen had been appropriated to the contract (ante, p. 40), but if the whole of the wine were destroyed the seller would be discharged from his obligation (ante, p. 19).

"Warranty," as regards England and Ireland, means an agreement with reference to goods which are the subject of a contract of sale, but collateral to the main purpose of such contract, the breach of which gives rise to a claim for damages, but not to a right to reject the goods and treat the contract as repudiated.

As regards Scotland, a breach of warranty shall be deemed to be a failure to perform a material part of the

contract.

Sir W. Anson, in his work on contracts, has collected six different senses in which the word warranty is used in the cases,1 but it is submitted that the definition given above is the most correct. See Note A, post, p. 175, where the subject is discussed at length. Lord Abinger, protesting against a warranty being confused with a condition, says, 66 a warranty is an express or implied statement of some things which the party undertakes shall be part of the contract, and though part of the contract yet collateral to the express object of it." 2 The Act, in accordance with this view, draws throughout a distinction between the terms "condition precedent" and " warranty." See sect. 11, ante, p. 25, and sects. 12 to 14, and 53, ante, p. 103.

1 Anson on Contracts, 5th ed., p. 309.

2 Chanter v. Hopkins (1838), 4 M. & W. 399, at p. 404. See, too, Behn v. Burness (1863), 33 L. J. Q. B. 204, at p. 207; Heyworth v. Hutchinson (1867), L. R. 2 Q. B. 447; cf. Kennedy v. Panama Mail Co. (1867), L. R. 2 Q. B., at p. 587, and notes to Cutter v. Powell, 2 Smith, Lead. Cas., 9th ed., p. 31.

(2.) A thing is deemed to be done "in good faith" within the meaning of this Act when it is in fact done honestly, whether it be done negligently or not.1

The House of Lords in Derry v. Peek 2 has exploded the notion of "legal fraud," and has established the principle that there is no tertium quid between good faith on the one hand, and bad faith or fraud on the other.

Sect. 62.

Good faith.

"First," says Lord Herschell, "in order to sustain an action of What condeceit, there must be proof of fraud, and nothing short of that will stitutes suffice. Secondly, fraud is proved when it is shewn that a false fraud. representation has been made (1) knowingly, or (2) without belief in its truth, or (3) recklessly, careless whether it be true or false. Although I have treated the second and third as distinct cases, I think the third is but an instance of the second; for one who makes a statement under such circumstances, can have no real belief in the truth of what he states. To prevent a false statement being fraudulent, there must, I think, always be an honest belief in its truth. And this probably covers the whole ground; for one who knowingly alleges that which is false, has obviously no such honest belief. Thirdly, if fraud be proved, the motive of the person guilty of it is immaterial. It matters not that there was no intention to cheat or injure the person to whom the statement was made." 3

(3.) A person is deemed to be insolvent within the Insolvent. meaning of this Act who either has ceased to pay his debts in the ordinary course of business, or cannot pay his debts as they become due, whether he has committed an act of bankruptcy or not [and whether he has become a notour bankrupt or not].1

The words in brackets refer to Scotland. By sect. 96 of the Indian

Taken from the 45 & 46 Vict. c. 61 (Bills of Exchange Act, 1882, s. 90); cf. Jones v. Gordon (1877), 2 App. Cas. 616.

2 Derry v. Peek (1889), 14 App. Cas. 337.

3 Ibid., p. 374, H. L.

+ Benjamin on Sale, 4th ed., 851; Biddlecombe v. Bond (1835), 4 A. & E. 332 (a general inability to pay debts); Ex p. Carnforth Co. (1876), 3 Ch. D. 108, C. A.; see at p. 122 (an inability to pay avowed either in act or word, and a consequent intention on the part of the indebted company not to pay their debts).

Sect. 62.

Deliverable state.

Commence

ment.

Short title.

Canon of construc

tion.

Contract Act, 1872, "a person is insolvent who has ceased to pay his debts in the ordinary course of business, or who is incapable of paying them."

(4) Goods are in a "deliverable state "deliverable state" within the meaning of this Act when they are in such a state that the buyer would under the contract be bound to take delivery of them.1

63. This Act shall come into operation on the First day of January, One Thousand Eight Hundred and Ninety-four.

64. This Act may be cited as the Sale of Goods Act, 1893.

The canon for construing a codifying Act was discussed by the House of Lords in a case on the Bills of Exchange Act, 1882. "I think," says Lord Herschell," the proper course is in the first instance to examine the language of the statute, and to see what is its natural meaning, uninfluenced by any considerations derived from the previous state of the law; and not to start with enquiring how the law previously stood, and then, assuming that it was probably intended to leave it unaltered, to see if it will bear an interpretation in conformity with this view." But of course if any provision be of doubtful import resort to the previous state of the law would be perfectly legitimate.2

The provisions of this Act must be read with and subject to the provisions of the Interpretation Act, 1889 (52 & 53 Vict. c. 63), which apply to all Acts of Parliament, unless expressly excluded.

The Act is divided into Parts, and those Parts again are sub-divided by various headings. Regard must be had to these divisions in construing the Act.3

1 See Blackburn on Sale, p. 152, and sect. 18 (1), (2).

2 Vagliano v. Bank of England (1891), A. C., at p. 145.

SCHEDULE.

This schedule is to be read as referring to the revised edition of the statutes prepared under the direction of the Statute Law Committee.

THE FACTORS ACT, 1889.

(52 & 53 VICT. c. 45.)

An Act to amend and consolidate the Factors Acts.

[26th August, 1889.]

BE it enacted by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal and Commons, in this present Parliament assembled, and by the authority of the same, as follows:

1

[The Factors Act, 1889, which repeals the previous enactments dealing with similar subject-matter, is a partial application to English law of the French maxim, "En fait de meubles possession vaut titre." The present Act is the result of a long struggle between the mercantile community on the one hand and the principles of common law on the other. The general rule of the common law was, Nemo dat quod non habet, and it was held that the mere fact that a person was in possession of goods or documents of title to goods did not enable him to dispose of those goods in contravention of his instructions with respect to them. The merchants and bankers contended that, in the interests of commerce, if a person was put or left in the possession of goods or documents of title, he ought, as regards innocent third parties, to be treated as the owner of the goods. As Bowen, L.J., has pointed out, the object of the Courts is to prevent fraud, “the object of mercantile usages is to prevent the risk of insolvency, not of fraud, and any one who attempts to follow and understand the law merchant will soon find himself lost if he begins by assuming that merchants conduct their business on the basis of attempting to insure themselves against fraudulent dealing. The contrary is the case-credit, not

1 See sect. 21, ante, p. 53, and Fuentes v. Montis (1868), L. R. 3 C. P. 268, at p. 277, per Willes, J.