CT 2.2 SALE OF GOODS (PRICE)
Price is an indispensable element of a contract for the sale of goods as seen from the definition in Section 1(1) of the Act (“for a monetary consideration called a price”).
Trade by barter cannot be governed by the act but if money is introduced (whether fully or partly) then the agreement can come within the scope of the act. In Aldridge V. Johnson a contract for the exchange of 52 bullock with 100 quarters of barley and some cash was treated as a contract for the sale of goods. G.J Dawson V. H and G Dutfield; exchange of old lorry with some cash on top to get a new one was treated as a contract for the sale of goods.
Fixing of price:
Section 8(1) of the Act provides that price may be fixed by the contract, or left to be fixed in an agreed manner or determined by the course of dealing between the parties. Where none of these can happen, then the buyer must pay a reasonable price-Section 8(2). The reasonable price is usually ascertained by reference to the current market price at the time and place of delivery which should (based on the facts and circumstances) be fair and reasonable-Acebal V. Levy; Matco Ltd V. Santa Fe Development Ltd.
The parties may even agree that a third party should fix the price-Section 9 SOGoods Act. Where third party fails to fix, parties may resile/withdraw. It all depends.
Although in May and Butcher Ltd V. The King it was successfully argued that there is no contract of sale if there is no agreed price; the court in Hillas V. Arcos, the court noted that absence of an agreed price is not fatal to the contract for sale of goods. As price (which should be reasonable) can be determined having recourse to the facts, nature of contract, dealings between the parties, practice in the trade, etc. In Foley V. Classique Coaches, court held that an agreement to supply petrol “at a price to be agreed by the parties” is a binding contract.
Therefore, if the intention of the parties shows that they intended there to be a price, the contract would not be nullified and the price for the goods would be determined having recourse to the variables earlier discussed.
In conclusion, parties are advised to agree on a price before concluding a contract in order to avoid the uncertainties and arguments as seen above.