History of Sales Law
Un. Sales Act 1-8
Un. Sales Act 9-16
Un. Sales Act 17-22
Un. Sales A. 23-32
Un. Sales A. 33-40
Un. Sales A. 41-46
Un. Sales A. 47-56
Un. Sales A. 57-62
Un. Sales A. 63-68
Un. Sales A. 69-75
Un. Sales A. 76-79
Comment, Sec. 1-2
Statute of Frauds I
Statute of Frauds II
Chose in Action
Chose in Action II
Chose in Action III
Chose in Action IV
Remedies for Breach of Warranty II
Bill Long 12/28/05
Understanding the Uniform Sales Act of 1906
In the previous essay I explained how Sec. 53(1)(a) of the 1893 English Sale of Goods Act incorporated, and ignored, a long and tangled history of set-off and recoupment in its provision. But now that we have "solved" that one, another question confronts us. Why do you have both a 53(a)(1) and a 53(a)(2) in the same statute? Why wouldn't you just say that a defendant has a remedy against the seller in the same suit for breach of warranty and that his damages are the difference between the value of the goods as warranted and the actual value of the goods? Why do you have to lay out two options by which a defendant can receive damages? The answer lies in history, which itself is often shrouded in some obscurity. Let's tell the story from a different angle than told in the previous essay.
English Judicial Administration at Common Law
The "modern" period of the English common law arises about 400 years ago. There you have the origin of the action of assumpsit ("he" or "she undertook"), which provides the basis of our modern law of contracts. There you have the origin of warranty law and, as I have shown elsewhere, of the parol evidence rule. In the English courts of the 17th and 18th centuries, the general rule was that the defendant could not plead a "diminution or extinction" of a debt in the same action that the plaintiff sued for the price. As Lord Mansfield said in 1768:
"Natural equity says, that cross demands (i.e., in the same case) should compensate each other, by deducting the less sum from the greater; and that the difference is the only sum which can be justly due. But positive law, for the sake of the forms of proceedings and convenience of trial, has said that each must sue and recover separately, in separate actions" (Green v. Farmer, 98 Eng. Rep. 154 (KB 1768), quoted in Clinton W. Francis, "The Structure of Judicial Administration..." 83 ColLR 35 (1983) at fn. 270).
As we saw in the previous essay, the statute of set-off from about 1700 allowed a narrow exception to this rule. By Mansfield's time that exception had grown quite a bit, but he states the rule as known in his time. But why? Why should you have a rule like this, requiring a defendant to bring a separate suit against plaintiff, when "natural equity" says that it should all be handled in one suit? The answer lies, as Francis argues, in the still-rudimentary nature of the English common law court system in the 18th century. Allowing the defendant to set up a cross-claim for damages in the same lawsuit would have lengthened the proceedings and confused the jurors. As one judge in 1806 said: "The extent of inquiry into which courts would be led by it would be endless" (Id. at 88.). Rules of evidence were still in their rudimentary form, and the law of assessment of damages was still inchoate. Allowing any more than one claim at a time would have threatened the stability of the system.
"From an administrative standpoint, restricting the issue at trial to the assessment solely of the plaintiff's damages was the only feasible course of aciton; anything more complicated than the simplest notion of setoff was liable to render the whole system unworkable" (Id.).
Now we have a plausible explanation for why at the older common law (say between 1600-1800) it would not have been permissible, except under very narrow circumstances permitted by the set-off statute, for a defendant to sue plaintiff by way of counterclaim for diminution of value when plaintiff was seeking an action for the price. The law needed to keep things simple so that the courts could be administered and lay juries could participate with knowledge in the system. One issue per lawsuit. Keep it simple. If you, defendant, have a claim, bring it separately.
I pause on this insight because it can help us develop deeper understanding of issues that have always be ciphers to me in the study of the common law. One issue was the doctrine of "independent covenants." This is most familiar from real estate law, but exists elsewhere, too. The doctrine of independent covenants provided, for example, that in an action for rent, the renter couldn't argue in a responsive pleading that the roof leaked and that the rent ought therefore to be reduced accordingly. He had to pay his rent money and then pursue this diminution in a separate action. Why? Independent covenants. But, why really? Probably because of the desire to keep control of judicial administration given the primitive state of law. That such a doctrine as independent covenants, then, should come into American law as if it has some kind of sacred status to it is nearly unfathomable. But it did, and it still remains in many jurisdictions.
Or, another example, this time from the law of warranty, is the notion of "collateral affirmations." A warranty at common law was not seen as in the essence of the contract but was seen as a "collateral" promise. Thus, if the seller brought an action for the price, the buyer couldn't argue in the same suit that there was a breach of warranty because, for some reason, a warranty was "collateral" and not essential. Well, if we view this from the perspective of judicial administration, maybe we have our reason why this doctrine grew up. It was "collateral" not because it was not essential (which it often was) but because it would have been too difficult to administer in one action. I am sure that American courts have tied themselves silly over the issue of "collateral" promises, but I won't go into that here.
The purpose of these two essays has been to try to explain the background of the two provisions of the English Sale of Goods Act of 1893, which formed the background to understand section 69(1)(a)-(d) of the USA. In trying to explain the two remedies offered to the buyer for breach of warranty in sec. 53 of the Sale of Goods Act, we needed to go deep into the history of the common law. But I think we have gotten somewhere. We know now why there are two remedies for breach of warranty when goods are already accepted. The basic remedy was (1)(b). You could bring a separate action for breach of warranty. (1)(a) grew up gradually in the 18th century. By the end of the 19th century, however, the long history of both sections was lost, and all you have are two remedies that are before you. Now that we have these two remedies we are ready to consider the new thing, rescission, that Samuel Williston brought into the Sales Act. The next two essays give us that information.
Copyright © 2004-2007 William R. Long