CONTRACT OF SALE OF GOODS
DEFINITION OF SALE OF GOODS
The Sale of Goods Act 1893 defines sale of goods as: ” A contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a money consideration called, the price“. The sale of goods is governed by the law of contract.
TERMS OF CONTRACT OF SALE
- The Price: The provisions of the contract states that the price in a contract may be determined by the contract or left to be fixed in a manner thereby agreed.
- The Subject Matter: The subject matter of the contract is the ownership of goods bought. The seller can sue for price the moment the goods passes to the buyer.
- Condition: This is a major term which goes to the root of the contract, a breach of which normally entitles the innocent party to treat the contract as having come to an end. It can be defined as a fundamental term of a contract. If the seller, for example, breaches a condition in a contract of sale, it may give the buyer the right to reject the goods completely.
- Warranties: This is a minor term which is subsidiary to the main purpose of the contract, the breach of which only entitles the innocent party to damages, but he cannot regard the contract as having come to an end.
PROVISION OF THE SALE OF GOODS ACT 1893
The following provisions are specified in the Sale of Goods Act 1893 regarding the duties of a seller.
- Right to Sale: The seller has a right to pass a good title. It is an implied condition that he has a right to sell the goods. In the case of Akoshile Vs Ogidan (1950), the defendant sold a car to the plaintiff, the car was a stolen one and the police took it away from the plaintiff. The plaintiff received the price he paid. The court held that the defendant has no right to sell the car.
- Merchantable Quality Goods: The goods sold are to be of merchantable quality.
- Goods Must Correspond with Description: Where goods are sold by description, there is an implied condition that the goods will correspond with the description. In the case of Re-more & Co. Vs Lauder (1921), there was a contract to purchase 3000 tins of canned fruit to be packed in cases, each containing 30 tins. A substantial part was delivered in cases containing 24 tins. In that case, it was held that the buyer could reject the whole consignment as it did not correspond with the description of the goods ordered.
- Enjoyment of Quiet Possession by the Buyer: The buyer shall enjoy quiet possession of the goods and the goods should be free from any encumbrance not known to the buyer.
- Bulk Must Correspond with Samples: Where goods are sold by sample, the bulk must correspond with sample and buyer must have opportunity of comparing bulk with sample, e.g. Drummod Vs Van Ingen. In the case, D ordered from a manufacturer a quantity of worsted coatings, with the weight and quality equal to sample. The coatings were unmerchantable owing to being slippery. D rejected the goods. The court upheld that D has the right to reject the goods.
- Fitness for Purpose: The goods supplied are reasonably fit for the purpose for which it was meant. In the case, Godley Vs Perry (1960) , a 6 year-old boy bought a toy plastic catapult. The catapult broke while being used and the boy lost an eye. He sued the store keeper and was successful as it was held that the storekeeper was liable.
- Delivery and Acceptance: It is the duty of the seller to deliver the goods and of the buyer to accept and pay in accordance with the terms of agreement.
Conditions that Constitute Acceptance
A buyer is deemed to have accepted the goods under the following conditions:
- When he signifies his approval or acceptance to the seller.
- When he does any other act adopting the transaction.
- If he retains the goods without giving notice of rejection within a reasonable time.
- When he did something inconsistent with the title of the seller.
Remedies for the Seller
The act confers certain rights on the unpaid seller, namely:
- He has lien on the goods for the price when he is in possession of them.
- He has the right to resale as limited by the Act.
- If the buyer becomes insolvent, he has a right to stop the goods in transit after he has parted with possession.
- The seller can maintain an action for the price.
- He can sue for damages for non-acceptance of the goods.
Remedies for the Buyer
- The buyer can sue for damages for non-delivery of the goods.
- The buyer can sue for specific performance.
- He may maintain an action for conversion.
- When there is a breach of warranty (subsidiary terms), the buyer can set up a claim against the seller (supplier).
TERMINOLOGIES ASSOCIATED WITH CONTRACT OF SALE
- Lien: A lien is the right to retain possession of goods (but not to sell them) until the contract price has been paid.
- Stoppage in Transit: This refers to the right to stop the goods and retake possession.
- Unpaid Seller: A seller of goods is an unpaid seller when the whole price has not been paid.
- Contract of Bailment: This is the temporary transfer of property, including cash, from the owner (bailor) to some other person (bailee) to be employed for a specific purpose.
- Gifts: A gift is a transfer of property without any consideration attached. It is not binding but executory.
- Contract of Skill and Labour: If the main purpose is not for the sale of goods but provision of labour, the contract of sales act does not apply, e.g. contract to paint a portrait is a contract for skill and labour.
- Agreement to Sell: This is executory with ownership being transferred at a later date.