SALE OF GOODS BY JUSTICE FRANCIS OBIRI SALE
SALE OF GOODS BY JUSTICE FRANCIS OBIRI
SALE OF GOODS • Sale of goods in Ghana is governed by the Sale of Goods Act (1962) Act 137. • Section 1 state inter-alia that a contract on sale of goods is a contract whereby the seller agree to transfer the property or goods to the buyer for consideration called a price consisting wholly or partly of money. • Goods are the movable properties or chattels in this sense. •
CLASSIFICATION OF GOODS UNDER THE SALE OF GOODS ACT • A. Specific goods: These are goods identified and agreed upon by both the seller and the buyer at the time or before the contract of sale. The goods form the subject matter of the contract of the sale. Example, purchase of shoe. • B. Ascertained goods: They are goods identified and agreed upon after the contract of sale is made. The difference between specific goods and ascertained goods is the time the goods are identified and agreed upon in the process of the contract formation. Example, purchase of bread.
• C. Unascertained goods; these are goods not so identified and agreed upon, for example, if Ama wants to buy 10 bottles of palm oil from a container. One cannot identify 10 bottles of palm oil unless it is poured out from the container. • D. Existing goods: Existing goods are physically in existence and owned by the seller. Existing goods are therefore goods that exist at the time of the formation of the contract. These goods will either be owned or possessed by the seller at the time the contract of sale is made. Example, video deck in an electronic shop.
• E. Future goods: They are goods to be manufactured or grown or acquired by the seller after making the contract. Goods are future goods when they are not yet owned by the seller, or when they are not yet in existence. Example is the cakes to be baked by Mary on Friday for her birthday party. • F. Contingent goods; The sale of goods by the seller which depends upon a contingency which may or may not happen. The sale will take place on or after something has happened. E. g. after the seller has obtained the loan to be used to manufacture the goods. •
CAPACITY TO BUY AND SELL • Anyone with contractual capacity under the law of contract can also enter into the contract of sale of goods. • However, where necessaries are delivered to a person under an agreement which is void because of that person incapacity to contract, he shall be bound to pay a reasonable price for it. • Necessaries are goods suitable to the conditions in life of the person to whom they are delivered and to his actual requirement at the time of delivery.
• TRANSFER OF PROPERTY • Unless a different intention appears, goods are at the seller’s risks until the property in them passes to the buyer after which the goods are at the risk of the buyer. • • TRANSFER OF RISK • The risks in the goods in a contract of sale are transferred to the buyer when delivery is made. Where the delivery of the goods had been delayed through the fault of either the buyer or the seller the goods are at the risk of the person whose actions caused the delay.
• Unless a contrary intention appears, the place of delivery is the seller’s place of business and if not his residence. If it is known to both parties that the goods are at a particular place, then that is the place of delivery. However the parties can agree and have the delivery done at the buyers place. • Unless otherwise agreed, the seller must be ready and willing to deliver goods in exchange for the price. • Unless otherwise agreed upon by the parties as who should bear the expenses and incidental in putting the good into a deliverable state the seller is bound to bear it. •
MEANS OF DELIVERY • The seller may deliver the goods to the buyer in the following ways: • 1. By transferring the actual physical control over the goods. That is handing over the possession of the goods to the buyer. Where the goods involved are portable or easy to handle item. • 2. By transferring the means of obtaining actual physical control over the goods. E. g. , the seller may give the keys which opens the door to where the goods are or show the buyer where and how the goods may be found. • 3. Transfer to the buyer, document of title over the goods. This will occur where the goods involved seem to be heavy. •
RIGHT AND DUTIES OF THE BUYER (Section 21) • 1. To make payment for the price of the goods. It is assumed that a cheque or other negotiable instrument will be conditional payment unless same is honoured. • 2. To reject the goods which are not fit for the intended purpose. This may be revealed after the examination of the goods. • 3. To accept the delivery of the goods but not the partial delivery unless agreed by the seller and the buyer that, the delivery will be made on installment basis.
• 4. It is assumed that, a cheque or other negotiable instrument will be a conditional payment unless it is honoured. • Therefore, If a buyer fails to pay on the day agreed, the seller is not entitled to repudiate the contract and sell the goods to a third party, he can only sue for damages arising out of the breach.
• NEMO DAT QUOD NON HABET • The general rule is that nobody can transfer a better title than what he has. This principle is expressed in the latin maxim nemo dat quod non habet. Thus where a non- owner transfers goods to another, the real owner can recover the goods from the purchaser.
• AUCTION SALES • It is a public sale which the auctioneer (the person conducting the sales) assembles the items involved before he takes lots and invite bids from the purchasers and the one whose bid he accepts becomes the buyer of the goods. Where an advertisement is made stating that, an auction sale would take place, it is not an offer capable of being converted into a contract when one relies on it.
• Section 4 of the Sale of Goods Act makes the following provision for an auction sale. • A. Where goods are put up for sale in lots, each lot is prima facie deemed to be the subject of a separate contract for sale. • B. The sale is complete when the auctioneer announces its completion by the fall of the hammer or in other customary manner. C. Until such announcement is made any bidder can withdraw his bid and the seller can also withdraw the goods.
• 4. Where the sale is expressed to be without reserve, the highest bonafide bidder is entitled to the sale of the goods.
THE DUTIES OF THE SELLER • What are the obligations that the seller has to perform under a contract for the sale of goods? • 1. The fundamental obligation of the seller: if a person buys some goods, he will expect that the seller will transfer possession of the goods to him. He will also expect that, the goods will be fit for the purpose for which he intends to use the goods. • 2. Existence of the Goods: In a contract for the sale of specific goods, it is implied that the seller has the goods which he is contracting for, and that, the goods are in existence.
• The buyer will expect the seller to tell him that the goods exist and if the seller begin to make statements about the non-existence of the goods, this would raise the suspicion of the buyer that the goods do not exist. • The Act provides that, in a contract for the sale of specific goods, there is an implied condition on the part of the seller that the goods are in existence at the time when the contract is made. • If the goods do not exist at the time the contract is entered into the contract is void in respect of specific goods.
• 3. Title; there is an implied condition on the part of the seller that, in the case of a sale, he has a right to sell the goods and in the case of an agreement to sell he will have such a right at the time when the property is to pass to the buyer. • In a contract of sale, there is an implied warranty on the part of the seller that he will have a right to sell the goods at the time when the property is to pass. • If therefore, the seller has no title, he is liable in damages to the buyer.
• The buyer will be entitled to a refund from the seller of any money paid to the seller for the goods. • 4. Sale by description: If before a sale takes place, the seller describes the goods, after which the buyer buys it, there is said to be a sale by description. • When there is a sale of goods by description, there is an implied condition that the goods shall correspond with the description.
• Goods are sold by description when the buyer contracts in reliance on the description. Even if he does not see them, he may be buying them by description. • The implication of a sale by description is that, if the seller does not state that the goods correspond exactly to the description, the law will imply that the goods must exactly correspond to the description. If the goods do not correspond to the description, the seller is in breach of contract and the buyer can terminate the contract and claim damages.
• 5 Sale by sample : Goods are often purchased by a buyer after he has been shown a sample of the bulk of goods which will arrive at a later time. • Where there is a sale by sample, conditions are implied that; • The bulk will correspond with the sample • The buyer will have a reasonable opportunity of comparing the bulk with the sample. • The goods shall be free from any defect making their quality satisfactory which would be apparent on reasonable examination of the sample.
• 6. Quality and fitness: There is an implied condition that, the goods are free from defects at the time the contract was made, provided that, the buyer has examined the goods in respect of defects which should have been revealed by the examination. • Where the goods are not sold by the seller in the ordinary course of his business the defects of which the seller was not and could not reasonably have been aware, could not be attributed to him. • Quality means goods must be saleable commercially under the description by which they were sold. The goods must be fit for the purpose for which the goods of that description are normally used. In determining this, regard can be made to the price paid for the goods and other circumstances of the sale.
• There is an implied condition that the goods shall be reasonably fit for the purpose where the buyer buys the goods in reliance upon the seller’s skills or judgment after making known to the seller the particular purpose for which the goods are required. • For example, Francis is studying law at KNUST and is having difficulty understanding the legal terminologies especially the latin maxims. • He decided to purchase a law dictionary the seller recommended which he purchased.
• When he began to use it, he discovered that no latin maxims are defined in the dictionary. • As he relied on the seller’s skill and diligence to purchase the dictionary, he could allege breach of an implied condition of fitness for purpose.
• 7. Quantity of goods: A buyer will usually request a certain quantity of goods from the seller. This does not guarantee that he will receive exactly what he ordered. The buyer may receive; • i. Less goods than contracted for. • ii. More goods than contracted for. • iii. Goods ordered mixed with other goods.
• If the buyer receives less or more than he contracted for he is entitled to reject all the goods he received. If he has not received what he contracted for, the seller has not performed his part of the contract. If the buyer decides, however, to accept the goods, he must pay for it at the contract rate. • The buyer has the right to reject the goods if it is less than what he contracted for. For example, if Kofi contract for 500 bags of rice and the seller, Ama delivers 450 bags, that is 50 bags less than what was contracted for, Kofi can reject them outright but if he accepts the 450 bags, then he must pay for the contract price.
• 8. Delivery of goods: delivery is the voluntary transfer of possession from one person to another. It may be actual or constructive. Delivery is constructive when the goods themselves are not delivered but the means of obtaining possession of the goods is delivered. • For example, by delivering the key of a lock-up garage where the sold car is kept or the bill of lading which will entitle the holder to receive the goods on arrival of the ship. • Whether the seller has to send the goods to the buyer or the buyer has to take the goods from the seller may depend on the terms of the contract.
• The Sale of Goods Act provides that, it is the duty of the seller to deliver the goods. The buyer also has obligations arising from the contract. The buyer must accept the goods and pay for them. Where the seller is bound to send them within a reasonable time. • It is the duty of the seller to deliver the goods. The buyer also has obligations arising from the contract. The buyer must accept the goods and pay for them.
• Whether the seller is bound to send the goods to the buyer within a reasonable time. • What is reasonable time will depend on the facts of each case, for example, perishable goods like tomatoes will need to be delivered more quickly than non perishable goods. • Where the seller is ready and willing to deliver the goods and request the buyer to take delivery and the buyer does not comply with the request within a reasonable time, the buyer is liable to the seller for;
• A. Any loss occasioned by his neglect or refusal to take delivery. • B. A reasonable charge for the care and custody of the goods. • Goods can be delivered to the buyer if the seller transfers the actual physical control over the goods to the buyer or he transfers to him the means to obtain actual physical control over the goods or he transfers to the seller documents of title to the goods.
• 8. Arrangement with carrier: generally, the seller must make arrangement with a carrier for the transit of the goods. • Under section 20 of the Act, it is the duty of the seller to enter into a contract with the carrier on behalf of the buyer. He acts as agent for the buyer. • The contract between the seller as agent for the buyer and the carrier must be on reasonable terms, taking into consideration the circumstances of the case.
QUALITY OF GOODS (Section 13 of Act 137) • It is the duty of the seller to deliver goods of a right quality. Where the goods are supplied by the seller whether or not the goods are of a certain description, which the seller supplied in the course of his business. • There is an implied condition that, the goods are free from defects which are not clear or known to the buyer before or at the time the contract is made. • When the buyer has examined the goods well the defects should be revealed to him.
• If an average person would after examination detect the defects, the buyer will be deemed to have constructive knowledge of the defect. • The seller of a second hand goods is not under obligation as to the quality and fitness of the goods to the buyer. •
EXAMINATION OF GOODS • A buyer would be deemed to have examined the goods if he is offered the full opportunity by the seller to examine it. • It is immaterial that the buyer did not examine the goods when though he was given the opportunity to do so.
• DESCRIPTIVE GOODS • There is an implied condition that, the goods are reasonably fit for the purpose for which the goods are required. • To enable a plaintiff sue for a breach of an implied condition that the goods are not fit for the purpose.
RIGHT OF AN UNPAID SELLER • An unpaid seller is the one to whom full payment of price has not been effected or if the negotiable instrument with which payment was made is dishonoured. • The rights of the unpaid seller are as follows: • A. Lien: This is where part of the price has been paid and the seller is still in possession of the goods. He has the right to exercise lien over the goods if same are not sold on credit or the term of credit has expired or the buyer has become bankrupt. • That is the right to keep the goods until the agreed price has been paid.
• B. Stoppage in transition: This is the right of the unpaid seller who has parted with the goods to stop them from being delivered, if they have not reached the buyer’s place or premises. • This takes place when the seller gets to know of the buyer’s bankruptcy or inability to meet his obligations or commitments. • C. Re-sale parted: Where the unpaid seller by the contract has right to resell in case of difficulty in payments by the buyer. The seller has the right to resell especially if the goods are perishable and cannot be stored for longer period.
• The seller can sue for damages or for the refund of unpaid balance from the buyer. This is done through court action. • Caveat Emptor: a latin phrase meaning “let the buyer beware”. It is a legal doctrine warning that without a warranty, a purchaser buys at his own risk and must make sure that the goods he buys are what they purport to be. • Caveat Venditor: the seller is to disclose all information about the defects on the goods to the buyer. Therefore, unless the seller disclaims, he would be liable for all defects on the goods.
• The buyer also has certain obligations to perform under a contract for the sale of goods. • These obligations can be looked at by examining what the seller would expect from the buyer in a contract of sale. • These are elaborated below; 1. The fundamental obligation of the buyer: when a seller sells goods, he expects the buyer to pay for it and takes delivery of the goods. In effect, if a buyer refuses to pay for the goods and accept delivery of the goods he is in breach of the contract and seller can terminate the contract and claim damages.
• A buyer cannot therefore take delivery of goods without paying for the price of the goods. • As a general rule, as the buyer is receiving the goods, he must pay for them. • One of the buyer’s primary interest will be to get possession of the goods. On the other hand, the seller’s primary interest will be to receive payment for the goods. • If the buyer is will and ready to receive the goods, then he must be willing and ready to pay for the price of the goods.
• Payment should therefore be concurrent with delivery. • This is provided for by section 22 of the Act. It states: ‘Unless otherwise agreed, the buyer must be ready and willing to pay the price in exchange for the delivery of the goods’. • 2. Time for Payment: It is the fundamental obligation of the buyer to pay for the goods and take delivery of the goods, one would have believed that it will also be a condition of the contract that he should pay for the goods and take delivery of the goods at the agreed time.
• Installment deliveries: unless he has agreed to do so, a buyer cannot be compelled to take delivery by installments. When there is a contract for the sale of goods to be delivered by stated installment which are to be separately paid for and either the buyer or the seller commits a breach of contract. It is a question depending on the terms of the contract and the circumstances of the case whether the breach is a repudiation of the whole contract or a severable breach merely giving a right to claim for damages.
• The buyer can therefore reject the goods if they are delivered in installment and there was no agreement that delivery should be in installment. • This is provided for in section 24. It states, ‘Unless otherwise agreed the buyer is not bound to accept delivery of the goods in installments.
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