Widgets

OBLIGATIONS CREATED BY A CONTRACT OF SALE OF GOODS


Duties of the Seller:

Under Section 8 there is no implied condition that the goods exist, the reason being that where the goods perish at the time of the contract the contract is void.  If the existence of the goods were an implied condition, then the section would read that where the goods perished at the time of the contract the contract would be voidable.  Under S. 8 there is no implied condition that the goods exist at the time of the contract because where goods perish at the time of the contract getting entered into, the contract is voidable.

Under Section 14 of Cap 31 the seller has a duty to pass a good title and under the Act, there is an implied condition that the seller shall pass a good title to the buyer.  The seller has a right to sell the goods either he has the title or has authority to sell the goods.  The seller is in effect under an obligation to pass a good title to the buyer.  A good title is a title without any encumbrances.

In a contract of sale there is an implied condition under 14 (a) that in the case of 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 property is to pass.  This requirement does not require that the seller to be the owner, only that he has authority to sell. 14(a)

If there is a breach of a condition, the innocent party has a right to repudiate a contract or if he doesn’t choose to repudiate, he has a right to claim for damages (i.e. he will be treating it as breach of a warranty) in the sale of goods the innocent party is allowed to recover monies paid if there is failure to transfer ownership.  If seller has no authority then he should not receive your money and you can receive your money back

 Read Section 14 (b) and (c) Cap 31

           

PERFORMANCE OF THE CONTRACT:

When parties to a sale of goods contract enter into that contract there are certain expectations from both parties.  The seller has duties to perform and so does the buyer.  These obligations unless discharged, neither can say that they have met the obligations of the contract.

Section 28 – 38 of SALE OF GOODS ACT


THE SELLER


The seller has the duty to deliver the goods; in S. 3(1) the seller transfers or agrees to transfer the property in the goods for a money consideration.  Transfer of property is not the same as delivering the goods.  In effect if the seller does not have the property in the goods or has no authority to sell, then there is total failure of consideration and if he has paid, the money must be returned but the seller still has a duty to deliver the goods and the buyer has a corresponding duty to accept delivery of the goods in accordance with the terms of the contract.  One of the very confusing sections, is Section 29

S. 29.  Payment and delivery concurrent condition.  To talk of concurrent creates an idea of mutual lack of trust between the parties.  S. 29 talks of an impossible method of performing a contract namely concurrent. It also talks of comparables.

S. 30(1)          Whether it is for the buyer to take possession of the goods or for the seller to send them to the buyer is

Rules as to delivery.  Delivery is at the place of the business of the seller but it can be agreed different.  This is a facilitative law and the parties set the pace.  Where the seller is to send the goods to the buyer but no time for sending the goods is fixed, the seller is bound to send those goods within reasonable time.

One of the basic problems is that when one places an order for drinks, there is nervous tension as to whether the proceedings are going to move as per the clock.  If the drinks are not there by 10a.m, on the 24th December there is anxiety, to put the parties at ease so 10 O’clock on the 24th of December has been held to be an unreasonable hour to deliver drinks for Christmas.  What is reasonable depends on the circumstances.  When the law talks about reasonableness, they bring in facts that are difficult to measure.  One needs to study case law.

4.         The third rule of delivery is that where at the time of the contract the goods are not with the possession but in the possession of a 3rd party, the seller does not discharge his obligations to deliver the goods by informing the buyer that the goods are with a 3rd party and that the 3rd party will deliver the goods, this does not discharge the obligations because the duty to deliver the goods is with the seller.   An uncertainty is created if when the buyer goes to collect the goods from the seller and complications arise and the buyer is caught unawares that there was an un-payment that the goods must be paid for before delivery can be effected.    Delivery is not affected until the 3rd party has informed the buyer that they are holding the goods that were sold to the buyer by the seller.  This rule changes the volume of goods to bailment in that the 3rd party is now holding the goods as an agent of the seller.  It has to be bailment free of any encumbrances.

There are other rules that tie on the duties of the seller to deliver.

  1. There has to be a demand from the buyer to the seller to deliver the goods where the time for delivery is not specified.  The seller tenders delivery of those goods and the tendering of the goods has to be made at a reasonable hour.  Where the seller tenders delivery of drinks for Boxing Day at 11. Am that has been held to be unreasonable.  People don’t ordinarily start anything until noon on Boxing Day and therefore it is not reasonable to deliver drinks at 11 am on boxing days. 
How can we apply Section 19(2) of the Sale of Goods Act Cap 31?

  1. Expenses and other incidentals of putting the goods in a deliverable state are on the seller unless the contract provides otherwise.

Section 8 and Section 9
S. 9 presupposes that the timing of the passing of property is unknown which is not known as Section 19 and 20 talk of determination of the parties as to when the property is to pass.


Section 31.  The duties of the seller to deliver the right quantities of the agreed upon goods.

The buyer may reject the goods if the quantities are not what he ordered.  The seller has an undertaking that he will deliver the right quantities of goods as agreed in the contract but should the buyer accept the delivered quantity, then he must pay for the goods at the agreed upon price.

Where the seller delivers goods, which are short of the quantities agreed upon, in both cases higher quantities or lower quantities, he has a right to reject the goods.  Similarly where the seller supplies a lesser amount of the goods the buyer still has the right to reject the entire lot but should he accept the lesser quantities he has to pay for the less quantities at the contractual price.

Where the seller delivers mixed goods and some of those goods comply with the contractual terms and others don’t meet the contractual agreement, then the buyer has a right to reject all of it or he has also the right to accept those goods that meet the contractual description and reject the ones that don’t.  He also has the right to accept the total mixed and if he does, then he must pay at the contractual price.

Section 31 (3) has become contentious you remember the case of the 10 cows in calf?   Revisit it and think of whether they were mixed goods and what the buyer should have done in this case.  If you were the judge what would you decide?

Section 31 (3) we are saying that property has not passed since property only passes when goods are of a given description.  Can the buyer and the seller under facilitative law have the option to keep the mixed goods?

Section 32:    (1)       Unless otherwise agreed the buyer of goods is not bound to accept delivery thereof by instalments.  

In this section, you have a contract for the Sale of Goods and once the contract has been entered, its delivery is by instalments and payment is also by instalments.

When sale is by instalments, it is up to the court to determine how to treat a breach of contract.   It is usually a unitary contract but performance is by instalments. 

Can you rescind a contract where some instalment does not meet the contractual standard?  In a situation where one party has performed its obligation, breach of a condition is treated as a warranty and the contract cannot be repudiated.  Sale by instalments is a unitary contract where performance is by instalment in which case once the buyer has dealt with the first instalment, he cannot repudiate the contract if one of the other instalments does not meet the standard.

2 possible scenarios – a unitary contract performed by instalments and where each instalment is a contract in its own right.

Section 35.    Buyers right of examining the goods
(1)          “Where goods are delivered to the buyer which he has not previously examined, he is not deemed to have accepted them unless and until he has had a reasonable opportunity of examining them for the purpose of ascertaining whether they are in conformity with the contract.”
(2)          Unless otherwise agreed, when the seller tenders delivery of goods to the buyer, he is bound, on request, to afford the buyer a reasonable opportunity of examining the goods for the purpose of ascertaining whether they are in conformity with the contract.”
Two questions arise
(i)                    It is a one key section which goes out to protect the consumer and it is the most direct section in terms of ameliorating the principle of ‘Caveat Emptor’.
(ii)                  The second problem is at whose risk do the goods remain while the buyer is examining them?  Who would bear the risk if there was a fire for example?

Section 35 is a useless section in that it presupposes a certain amount of knowledge in the buyer to identify and detect defects in the goods.  The law of contract took both parties to be at par in the product knowledge but the sale of goods is asserting that the seller and buyer are not at par.

The critical issue in Section 35 is in keeping in trying to protect the consumer in a market where technology has advanced so much while the consumer is still the way he was in the 1900s.  Section 35 deals with simple tangible goods which are not capable of complicated physical condition and the buyer can identify most of the defects.  Modern technology has now ruled out the buyer examining good and noticing any tangible defects.  Consequently the consumer protection Sections need a total overhaul whereby an independent body can examine goods and certify fitness in respect of when they are to be bought and when they are to be consumed.

The consumer accepts that in light of technology, they have to tell them about the goods.  In the wake of technology, the consumer is worse of than he was in 1920.  There is nothing you can discover as a consumer from the manufacturer and the government is doing nothing to protect the consumer.  The consumer is at risk.

Section 36.  Acceptance
“The buyer is deemed to have accepted the goods when he intimates to the seller that he has accepted them or when the goods have been delivered to him, and he does any act in relation to them which is inconsistent with the ownership of the seller, or when, after the lapse of a reasonable time, he retains goods without intimating to the seller that he has rejected them.

When he intimates to the seller his acceptance of the goods or after a lapse of reasonable time he intimates to the seller that the goods are okay when they have been delivered to him.

In accordance with Section 35, if you have not examined the goods, you have not accepted them.  No property passes until the goods have been examined to ascertain that they conform with the contract.

 
 
 

Like Us on Facebook

Contact Form

Name

Email *

Message *