Sale of Goods Act PDF

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Sale of Goods Act content for Business Organisations Law ...

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Definition of sale;  An agreement in relation to a subject matter (‘goods’) and its price, paid in money, between the seller and the buyer for the purpose of transferring ownership in the subject matter to the buyer; sale of goods contract Formation of the contract;  Follows the general rules of formation of a contract; o Capacity o Consensus in idem (offer and acceptance as to the essential terms, otherwise dissensus o If there is seemingly consensus but the objective intention of one of the parties (or both) is not reflected in the consensus ostensibly expressed (so objectively no consensus in idem), then there is error (and potentially misrepresentation) o Contract would also be defective if it was fraudulently induced.  May be absolute or conditional (s2(3)). o ‘Sale of goods’, and ‘agreement to sell’  Doesn’t need to be in writing, actual formation of contract is not subject to any formality requirements for its validity. o Exceptions are hire-purchase and credit-sale contracts governed by the Consumer Credit Act 1974.  Commercial contracts of sale -> in the course of business  Consumer contracts of sale -> the buyer is not in the course of business contracts with a seller who is dealing in the course of business o Distinction is important in the context of buyer’s remedies for a seller’s breach of the contract of sale  Also purely private contracts of sale where neither party is dealing in the course of business o Distinction between commercial/consumer sales and private sale is important for the assessment of whether in a contract of sale the implied terms as to the right quality of goods apply. Goods;  S1(1) SoGA 1979 only applies to ‘goods’  Goods -> all corporeal moveables except money s61(1) o Also includes an undivided share in goods o Heritable property (land), incorporeal moveable property (company shares) and intellectual property are excluded.  Specific goods -> are goods ‘identified and agreed on at the time a contract of sale is made (s61(1)).  Unascertained goods -> (a) purely generic goods, such as 100 tonnes of rice, (b) goods to be manufactured or grown by the seller, or (c) an unidentified part of a specified whole, such as 200 tonnes out of a particular load of 500 tonnes of wheat. o Goods in class (b) are necessarily also future goods, while goods in classes (a) and (c) are either existing or future goods, depending on the circumstances.  S5(1); o Existing goods -> whether specific or unascertained are those goods which the seller owns or possesses when the contract is concluded. o Future goods -> goods to be manufactured or acquired by the seller after the formation of the contract of sale. Where under a contract of sale the seller sells future goods, this contract operated as an ‘agreement to sell’ these goods (s2(1)).

Price;  S2(1); A contract of sale of goods is a contract by which the seller transfers or agrees to transfer the property in goods to the buyer for a money consideration, called the price.  If the contract is lacking an agreement on price this is a fundamental lack of consensus, and no contract has been concluded.  Where there is a failure to stipulate a price (not where there is a dissensus about the price), the law can step in.  S8(1); The price in a contract of sale may be fixed by the contract, or may be left to be fixed in a manner agreed by the contract, or may be determined by the course of dealing between the parties.  Where the price is not determined as set out in s8(1), the buyer must pay a reasonable price s8(2); o This is a question of fact depending on the circumstances of each particular case s8(3).  Also is possible to have the price fixed by the valuation of a third party who then determines the price in the contract (s9(1)). If the third party cannot or does not make the valuation the contract is avoided o Where due to the fault of either the seller or the buyer, the third party is prevented from making the valuation, the party not at fault can claim damages from the party at fault (s9(2)). Consumer Credit Act 1974;  Credit agreements under the Consumer Credit Act arise in connection with sale of goods contract when the buyer obtains a loan to enable him to buy the goods.  Consumer credit agreements have to comply strictly with the formalities required by the Consumer Credit Act 1974 to be enforceable.  The debtor has a cancellation right of the credit agreement under certain circumstances (s67, s68) Performance;  Every sale of goods has a personal component and a proprietary component; o Personal component -> personal rights enforceable against the other contracting party, particularly the sellers duty to deliver the goods and the buyers duty to accept and pay for them. o Proprietary component -> ‘conveyance’ deals with the transfer of the real right (property right) of ownership in the goods sold from the seller to the buyer. Personal component;  If there is a material breach in either a express or implied term of the contract then the party affected by the breach holds the right to rescind  S(6) where a contract concerning specific goods is frustrated -> contract is void  Where there is an agreement to sell for specific goods and subsequently the goods perish before the risk passes to the buyer -> agreement is void (s7) Passing of Risk  According to s20 the passing of ownership typically entails the passing of the risk  The party who bears the risk must perform the contract when the goods accidentally perish or deteriorate. o If the goods are at the seller’s risk, the seller normally remains liable to the buyer for non-delivery if the goods are accidentally destroyed or damaged. o If goods are at the buyers risk -> buyer will have to pay the purchase price if goods are destroyed/damaged.

S(20(1)); Unless otherwise agreed, the goods remain at the seller’s risk until the property in them is transferred to the buyer, but when the property in them is transferred to the buyer the goods are at the buyer’s risk whether delivery has been made or not. o Parties can depart from the principle room with agreement. o Exception (1); where the delivery has been delayed by the fault of either party, the goods are at the risk of the party at fault. o Exception (2); the party in possession is liable to the other party as custodier for any loss as a result of his/her negligence. o If it is a consumer contract is question the rules concerning risk under s20(1)-(3) don’t apply, and the goods remain at the sellers risk until they are delivered to the consumer (s20(4)).  don’t confuse risk with frustration. If a contract to be performed is frustrated, that is, performance becomes impossible, then neither party is under any liability to the other. If, however, the goods are at the risk of one party, then that party is liable to the other party for non-delivery or the price, as the case may be. Sellers Duties;  sellers duties are directed towards providing the buyer with ownership (and usually possession) of goods which are to the agreed quality and quantity standards agreed by the parties. o Duty to deliver and to pass good title (Butterworth v Kingsway Motors Ltd)  Case; A had car on hire purchase and sold car to B before paying off last installment -> didn’t have title to sell the car -> contract was reduced o Delivery at the right time  If delivery is of the essence, the buyer can treat the contract as terminated if the seller’s delivery is delayed.  S29(3) if no agreed time, seller is bound to send them within a reasonable time. o Delivery in the right quantity  S30 o Delivery in the right quality  Sale by description s13  Ashington Piggeries v Christopher Hill Ltd  Description was ‘fair, average quality’  Court found it was of ‘fair, average quality’ despite the presence of the toxic agent, so no breach of s13  Beale v Taylor; description need not be in words, can also be in figures, images and so on.  The description must have sufficient influence on the sale (Harlingdon & Leinster Enterprise Ltd v Christopher Hull Fine Arts). This case shows that not all descriptive words are descriptions of meaning, the artists name was not influential in the buying of the paintings, so contract couldn’t be reduced on the discovery it was a forgery.  Goods must be of satisfactory quality or fitness s14  Only applies to sales in course of a business (BuchananJardine v Hamilink -> the seller sold the entire stock of the business -> pursuer (seller) claimed that he could not have been 

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selling in the course of a business where in fact he sold the business itself to the defender -> the court disagreed -> the law required a sale in the course of a business, not in the course of business, so a displenishing sale is a sale in the course of a business -> even though it is the last act in the business)  If sale is made through an agent, it is still in the course of business  ‘satisfactory quality’ -> s14(2A) -> goods that meet the standard that a reasonable person would regard as satisfactory, taking into account the description and price of the goods and any other relevant circumstances. S14(2B) -> ‘quality’ includes the state and condition of the goods -> fitness for all purposes for which goods of the kind in question are commonly supplied -> appearance and finish -> freedom from minor defects -> safety -> durability. Goods fit for a particular purpose  S14(3) -> where buyer expressly or by implication, makes known to the seller any particular purpose for which the goods are being bought, there is an implied term that the goods supplied under the contract are reasonably fit for that purpose -> seller is only liable for goods sold in the course of a business -> does not apply if the buyer does not rely on the skill or judgement of the seller, or if its unreasonable for the buyer to rely on the sellers skill or judgement (Jewson v Boyhan -> the buyer, a property developer -> purchased boilers from a hardware store -> didn’t rely on the sellers skills or judgement, nor was it reasonable for him to have done so -> buyer could rely on that they were fit for purpose as boilers -> but since the buyer did not give the seller any information which enabled the seller to form a view as to the effect which the boilers would have on the flats energy ratings, the buyer could not reasonably have thought that the seller realized that the buyer was relying on the sellers skill and judgement -> thus failed under s14(3) when he sued for breach due to sufficiently low energy rating of the flats.  Australian Knitting Mills Ltd -> buyer has no duty to make known an obvious purpose -> it is only the purpose for which any one would ordinarily want the goods -> in this case buyer got a skin disease from a woolen hat -> buyer didn’t need to state the purpose as it was so obvious.  Flynn v Scott -> rejection of van by buyer b/c it wasn’t suitable for livestock -> case failed -> buyer had not made known to the seller this particular purpose, so seller hadn’t warranted the fitness for such a purpose -> s14(2) didn’t apply either, since the van was fit for all common general purposes. Sale by sample s15 o If there is a sale by sample there is an implied term that a) the bulk will correspond with the sample in quality, and b) that the goods will be free from any defect,

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making their quality unsatisfactory which could not be apparent on reasonable examination of the sample. Content of the Contract: Duties of the Buyer o Duty to take delivery  S37(1) -> if the buyer fails to take delivery within reasonable time after a request by the seller, the buyer is then liable to the seller for any loss the seller suffers as a result of the buyers neglect or refusal to take delivery -> buyer is also liable for any charge for care and custody o Duty to pay the price  S27

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Breach of Contract: Remedies of the seller o Personal remedies  Action for price (s49); acceptance and refusal to pay  Damages (s50); non-acceptance  Damages are measured according to the estimated loss directly and naturally resulting in the ordinary course of event from the buyers breach. o Possessory remedies  A) a lien on the goods or right to retain them for the price while in possession of them; b) after the seller has parted with possession, a right of stopping the goods in transit if the buyer becomes insolvent; and c) a right of re-sale.

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Breach of Contract: Remedies of the buyer o Acceptance of goods  Buyer not deemed to have accepted the goods until he/she’s had reasonable time to examine them o Rejection of goods  Material breach -> buyer entitled to reject o Additional remedies for consumers (s15B(2), ss48(A)a48(C).  In a consumer contract, every breach is a material breach  48A) the right to require the seller to repair or replace the goods, according to the rules in 48B  the right to require the seller to reduce the price of the goods by an appropriate amount or to rescind the contract of sale, if conditions in s48C are met. o Damages for non-delivery  If breach is not material than this is the only remedy the buyer has (s15B(1)(a)) -> if breach is material buyer can rescind and recover damages. o Damages for breach of term relating to quality o Specific implement o Connected lender liability under the Consumer Credit Act 1974...