Trade Electronix Ltd v Best Buy Today (Wholesale) Ltd (In Administration) & Anor

A binding contract for the sale of goods is not established where contemporaneous documents record only an opportunity for future purchases, fail to identify the goods or quantity with sufficient certainty, and treat an advance payment as a separate matter. Later dealings and accounting entries do not, without more, cure that deficiency. An appellate court may respect a trial judge’s credibility findings while overturning a contractual inference that the evidence cannot support. Where the claimant cannot establish title immediately before the alleged interference, a conversion claim fails, and issues concerning appropriation or seller-in-possession provisions need not be decided.

Trade Electronix Ltd claimed damages for conversion of electronic goods held in Best Buy Today (Wholesale) Ltd’s warehouse. It alleged that payment of £150,000 created a contract for the sale of goods and that title passed when goods were appropriated to the contract. Davenham Trade Finance Ltd relied on a later sale by BBT and section 24 of the Sale of Goods Act 1979.

The High Court dismissed the claim. On TE’s appeal and DTF’s respondent’s notice, the Court of Appeal considered first whether TE had acquired title under a binding contract. The central issue was whether the contemporaneous documents and subsequent dealings established such a contract.

The Court of Appeal dismissed the appeal. The judgment of Moore-Bick LJ was agreed by the Chancellor and Sullivan LJ.

1. The trial judge was entitled to reject parts of the evidence of Mr Smith and Mr Singh after assessing their reliability at trial. The Court of Appeal had no proper basis to revisit those credibility findings.
2. That did not prevent the appellate court from reviewing the legal conclusion that a contract had been formed. The letter of 2 April 2005 was the best evidence of the parties’ discussions. It described an opportunity to purchase substantial quantities of stock in the future, rather than confirming an existing agreement for a specified quantity. It did not identify the goods to be sold with sufficient certainty.
3. The reference to the urgent payment of £150,000 was treated separately from the proposed stock purchases. It might have been an advance against future dealings, but it did not establish a present agreement to buy £150,000 worth of goods. Entries in TE’s books, DTF’s notes and emails, and deliveries made before the administration did not cure that deficiency.
4. TE therefore failed to establish that it had acquired title to the goods. Its conversion claim was bound to fail. It was unnecessary to decide the issues concerning appropriation or the subsequent dealings with the goods, including the issue raised under section 24 of the Sale of Goods Act 1979.

• Court of Appeal (Civil Division): Appeal dismissed after the court held that TE had not shown a binding contract under which title to the goods had passed.
• High Court of Justice, Chancery Division: His Honour Judge Behrens dismissed TE’s conversion claim, having found that a contract existed but that DTF obtained title before the goods were disposed of.