CT 2.1 SALE OF GOODS (INTRODUCTION)
The Sale of Goods Act 1893 (a statute of general application), the Sale of Goods Law of the States, alongside other relevant statutes, rules of Contract, Common law and equity apply to contracts for the sale of goods-Henry Stephens ltd V Complete Home Enterprise, Section 61(2) of the Sale of Goods Act, United Scientific Holdings V. Burnley District Council, Lord Diplock. Section 52 of the Sale of Goods Act provides for the equitable remedy of specific performance therefore (as opposed to Atkin L.J’s obiter dictum in Re Wait (that equity does not apply)) it is presumed that the Sale of Goods Act envisaged the application of Equity. See also Leaf V. International Galleries.
DEFINITION OF A “CONTRACT OF SALE OF GOODS”.
By Section 1(1) of the Sale of Goods Act, it is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a monetary consideration called the price.
This section recognises a sale and an agreement to sell which is distinguished in Section 1(3); Where property in the goods are transferred from the seller to the buyer, a sale occurs. Where the transfer shall take place at a future date or upon the fulfilment of some condition then it is an agreement to sell (such distinction would help us to determine where risk in the goods lie).
Section 1(4) of the Act provides that an agreement becomes a sale once the time lapses or the condition is fulfilled.
DEFINITION AND CLASSIFICATION OF GOODS.
Section 62(1) of the Act (the interpretation section) defines goods. It includes:
– Goods includes all chattels “personal” (no real property like land is involved): excluding things in action and money.
– Goods includes emblements, industrial growing crops, and things attached to or forming part of the land provided they are agreed to be severed before sale or under the contract of sale.
Section 7(2) of the Law Reform (Contracts) Law, Lagos adopts this definition.
Chattels personal: are tangible personal things such as car, animal, and so on. With the exception of real property and minerals unless detached from the land.
Things in action: These are intangible rights rather than goods because although a person is entitled to it, he cannot take physical possession of it. For example shares, and negotiable instrument. Cannot be sold under Sale of goods Act.
Money cannot be sold because it is in itself, a legal tender. Money can however be dealt with as a curio piece (antique) Where it is no longer in circulation and no longer a legal tender.
Emblements: include products of agricultural labour of man, which mature annually. For example maize, yam, cassava, etc. Severed or agreed to be severed under the contract.
Industrial growing crops: Fructus Industrales Man-cultivated crops which do not mature annually.
Things attached to or forming part of the land: Fructus Naturales. Growing naturally rather than a product of man’s labour. For example Timber. Provided they are agreed to be severed before or under the contract for the sale of goods.
CLASSIFICATION OF GOODS
- Specific goods.
- Ascertained goods.
- Unascertained goods.
- Existing goods.
- Future goods.
Specific goods: Are goods identified and agreed upon at the time the contract of sale is made-Section 62(1), Ajayi V. Eburu. The party with the specific goods generally bears the loss.
Ascertained Goods: Lord Atkin L.J in Re Wait defined it as; Goods identified in accordance with the agreement after the contract is made.
Unascertained Goods: Goods which have not been specifically identified or agreed upon. May be a sale of purely generic goods, part of a larger quantity, goods to be manufactured or acquired by the seller. For example where a buyer requests for a crate of star… the crate can be brought from the hundreds of crates in a warehouse.
Existing goods: goods owned and possessed by the seller at the time of the contract-Section 5(1).
Future goods: not yet in existence or not yet acquired by the seller. Goods to be possessed by the seller after the contract of sale- Section 5(1).
Though similar in some respect, a contract of sale must be distinguished from other transactions.
Section 1(1) of the Sale of Goods Act defines a sale of goods as a contract where the seller transfers or agrees to transfer the property in goods for a monetary consideration called the price.
Sale Distinguished from Hire purchase: A hire purchase agreement involves a transfer of possession (i.e. mere custody) coupled with an option to purchase. While a contract of sale involves the transfer of ownership in goods. Again, there are usually two parties in sales of goods while three in hire purchase. The Sale of Goods Act governs contracts for the sale of goods while the Hire-Purchase Act governs contracts of hire-purchase.
Sale distinguished from exchange (trade by barter): An exchange occurs where goods are traded for goods. No monetary consideration is involved. Section 1(1) Of the Sale of Goods Act makes monetary consideration an important element of a contract for the sale of goods. However, where there is an introduction of money (whether in part or full), the contract shall be governed by the Sale of Goods Act- Aldridge V. Johnson.
Sale of Goods and Bailment: A bailment occurs where one party (the bailor) grants temporary possession of his goods to another (bailee). Unlike a bailment, Sale involves a transfer of both property and possession.
Sale and Contracts for Works and Materials (skill): a contract for works is a contract for the provision of skill and labour. In Robinson V. Graves, Lord Greer noted that the substance of a contract to paint a portrait was the skill and expertise of the artist in producing the picture and not that of sale. A sale occurs where the product is the substance of the contract. If the substance of the contract is the provision of skill and expertise but a product is ancillary to it, it is a contract for skill.
In practice, this distinction is ambiguous and the dividing line is thin.
In Locket V. A. and M Charles ltd a contract to prepare and supply food in a restaurant was held to be that of a sale of goods. Also, in Ashington Piggeries ltd V. Christopher Hill. A contract to prepare and supply animal foodstuffs according to specification was held to be that of sale of goods. In Cammell Laird and co ltd V Manganese Bronze and Brass Co, a contract to make and supply ship propellers was held to be a contract for the sale of gods.
If on the other hand, the client selected from a collection of the finished works, it is a sale of goods.
All these distinctions are vexatious but still try and understand the principles. The cases may vary according to the judges foot.
CAPACITY: Is governed by general law of contract –Section 2 of the Sale of Goods Act. Sale must be between persons (i.e. Human or Legal like company).
Note however that where necessaries are sold to a non-entity/legally incapable, (infant, insane, etc) he must pay a reasonable price. Nash V. Inman. Labinjoh V. Abake.
FORMALITIES: Section 3 of the Act does not provide any strict formalities. Subject to any statutory provisions, it may be written, oral, or even by conduct or partly any.