a contract for sale of goods

SALE OF GOODS Part 1 Mevan Kiriella Bandara

What is Sales of Goods • Sale of Goods is the most common way on which ownership passes from one person [SELLER] to another [BUYER] • APPLICABLE LAW: Sale of Goods Ordinance No. 11 of 1896 (as amended) Identical to the English Law © Mevan Kiriella Bandara

A CONTRACT FOR SALE OF GOODS • S. 2(1) – SALE OF GOODS ORDINANCE “A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a money consideration, called " the price". There may be a contract of sale between one part-owner and another.”

• Sale / Agreement to Sell SALE – When the Property in the goods are transferred. AGREEMENT TO SELL – when the Transfer of Property takes place at a future time (c) Mevan Kiriella Bandara

A CONTRACT FOR SALE OF GOODS • When does an Agreement to Sell become Sale? When time lapses or the conditions are fulfilled • Most important elements in a Sale of Goods Contract: 1. The Goods 2. The Money Consideration 3. Capacity to Contract (c) Mevan Kiriella Bandara

WHAT ARE “GOODS”? S. 59 Sale of Goods Ordinance: “goods" include all movables except moneys. The term includes growing crops and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale

-Money is not a “good” – Commemorative coins or currency notes? -Gas and Electricity ? - Blood? – R v Australian Red Cross [1991] (c) Mevan Kiriella Bandara

WHAT ARE “GOODS”? • Anything attached / forming part of a Land or Building? • If any item is part of a Land or Building cannot be severed without damaging it, it is not a good.

• Music? • Computer Software?

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CONSIDERATION • Money • Part Money and Part Goods?

CAPACITY

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WHAT IS NOT A CONTRACT FOR SALE OF GOODS 1. CONTRACT FOR WORK AND MATERIAL Goods Vs. Skills Lee Vs. Griffin (1861) Robinson Vs. Graves (1935)

2. CONTRACT OF HIRE PURCHASE (c) Mevan Kiriella Bandara

HOW A CONTRACT OF SALE OF GOODS ARE MADE 1. Writing and/or Verbally 2. Implied by the conduct of the parties A CONTRACT FOR THE SALE OF GOODS WILL BE ENFORCEABLE BY ACTION ONLY IF: 1. The buyer shall accept part of the goods so sold, and actually receive the same; or 2. If some note or memorandum is in writing and is signed by the party to be charged (c) Mevan Kiriella Bandara

SUBJECT MATTER OF THE CONTRACT “Goods” VS. “Future Goods”

If in a contract for the sale of Specific Goods, the goods have, without the Seller’s knowledge, perished at the time when the contract was made, the contract is Void. [S. 7] How is it when there is an “Agreement to Sell”? (c) Mevan Kiriella Bandara

SALE OF GOODS BY DESCRIPTION • GOODS MUST CORRESPOND DESCRIPTION • Reliance on the description is necessary Moore Vs. Landaner [1921]

Arcos Vs. Ranaasen [1933]

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IMPLIED CONDITIONS AS TO QUALITY OR FITNESS GENERAL RULE: Every buyer must satisfy himself as to the quality or fitness of the goods he is buying. If he decides to buy a good he must be satisfied. CAVEAT EMPTOR rule: BUYER BE AWARE The buyer must take care and see that he is buying the good he wants (c) Mevan Kiriella Bandara

IMPLIED CONDITIONS AS TO QUALITY OR FITNESS • Exceptions: 1. When the Buyer, expressly or by implication, makes known to the seller the particular purpose for which the goods are required so as to shown that he relies on the seller’s skill and judgment, then the goods sold must be reasonably fit for that purpose. [S. 15(1)] Frost Vs. Aylesbury Diary [1905]

Grant Vs. Australian Mills [1936] (c) Mevan Kiriella Bandara

IMPLIED CONDITIONS AS TO QUALITY OR FITNESS 2. Goods must be of a Merchantable Quality when goods are bought by description from a Seller who deals in goods of that description (whether he be a manufacturer or not) What is Merchantable Quality? i. They have defects unfitting them for their ordinary use; or ii. Their condition is such that no one, with knowledge of their true condition would have bought them. Wren Vs. Holt [1703] (c) Mevan Kiriella Bandara

SALE OF GOODS BY SAMPLE A Contract of Sale is a contract for sale by sample where there is a term in a contract expressly or implied to that effect. Applicable rules: 1. The bulk sold must correspond in quality with the sample sold shown to the buyer; 2. The Seller must give a reasonable opportunity for the Buyer to inspect the bulk with the sample; 3. Must be of merchantable quality Drummond v Van Ingen [1887] (c) Mevan Kiriella Bandara

IMPLIED CONDITIONS AND WARRANTIES IN A CONTRACT FOR SALE OF GOODS

• Conditions: The Seller has the right to sell the goods. Must have Title to the goods • Warranties: 1. The Buyer must have and enjoy quiet possession of the goods – seller liable for damages if disturbed 2. The goods are free from any charge or encumbrance in favour of a 3rd Party (c) Mevan Kiriella Bandara