CONTRACT OF SALE
Essentials of a Contract of Sale:
1. It is a contract.
2. Between two parties.
3. To transfer or agree to
transfer.
4. The property in goods.
5. For a price, that is, money
consideration.
MEANING OF GOODS
GOODS form the subject of a
contract of sale. They mean every
kind of movable property other
than actionable claims & money,
and include stock and shares,
growing crops, grass and things
attached to or forming part of the
land which are agreed to be
severed before sale or under the
contract of sale.
CONDITION
It is the essential part or vital term
of a contract whose breach creates
the option for the buyer to
terminate the contract.
X wants to purchase a horse from Y, which can
run at a speed of 50Kms/hour. Y pointing at a
particular horse says "This horse will suit you." X
buys the horse but later on finds that the horse
can run at a speed of 30Kms/hour. This is a
breach of condition because the stipulation made
by the seller forms the very basis of the contract.
WARRANTY
It is the subsidiary part of the
contract. Its breach can only
lead to a claim for damages but
not to a repudiation of the
contract.
A man buys a particular horse, which is warranted
to be quiet to ride and drive. The horse turns out
to be Vicious, the buyer's only remedy is to claim
damages. This is a breach of warranty, because
the stipulation made by the seller was only a
collateral one.
IMPLIED CONDITIONS
Condition as to title
Condition in a sale by description..
Condition in a sale by sample (the bulk
must correspond with the sample)
Conditions as to fitness & quality (in the following
cases only; in other cases caveat emptor applies)
IMPLIED CONDITIONS
Condition as to merchantability
(exception to the rule of caveat emptor)
IMPLIED CONDITIONS
Condition as to
merchantability
When applied to food products,
the condition of fitness of
merchantability requires that
the goods should be
wholesome, i.e. fit for the
purpose of consumption.
IMPLIED WARRANTIES
Warranty as to quiet
possession.
Warranty as to non-existence
of encumbrances.
Warranty as to disclosure of
dangerous nature of the
goods to the innocent buyer.
Buyer Beware
There is no protection for the
buyer in relation to the quality of
goods except in the following
situations:
Goods sold must be of merchantable
quality. However, if the buyer has examined
the goods, defects which such examination
ought to have revealed would be exempted
from the requirement of merchantable
quality.
If the buyer relied on the skill and judgment
of the seller, the good should be fit for the
Buyer Beware
If the buyer relied on the skill
and judgment of the seller, the
good should be fit for the purpose
described by the buyer.
Baldry v Marshall (1925) The
Bugatti car case
Grant v Australian Knitting Mills
Ltd. (1935) Case of sulphites left
behind in the woollen underwear
garments causing severe case of
dermatitis (case attracted both the
CHANGE OF CONDITION TO
WARRANTY..
CHANGE OF CONDITION TO
WARRANTY..
CHANGE OF CONDITION TO
WARRANTY..
Sale or return
transactions
The property passes when the person
to whom goods have been given on
sale or return signifies his approval
or acceptance to the seller or does
any other act adopting the
transaction.
Kirkham v Attenborough & Gill (1895-99) - K
sends jewellery to Winter on Sale or return basis
Winter pawns jewellery to A & G and dies K
wasnt paid for it K demands return of the same
from A & G A&G refuse to return unless money
borrowed is paid back
Unascertained Goods
No property in the goods is transferred to the buyer
unless and until the goods are ascertained. This
does not, however, mean that property would
automatically pass once it is ascertained. It would
depend on the intention of the parties as to when
they want the property to pass.
Pignataro v Gilroy (1919) G sold to P 140 bags of
rice - Sale by sample G would deliver 125 bags to P at
a warehouse 15 bags were to be collected by P from
Gs place of business G sends reciept for cheque
received & delivery order for 125 bags letter stating
that 15 bags were ready for delivery P neglected to
collect bags G sends two more letters bags
subsequently stolen G took all care and was not
negligent Had ownership of 15 bags transferred?
Unpaid Seller
When the whole of the price has not been
paid or tendered.
When a negotiable instrument or a bill of
exchange has been received as conditional
payment and the condition in which it was
received has not been fulfilled by reason of
the dishonour of the instrument or otherwise.
The seller remains as unpaid seller as long as any portion
of the price, however small, remain unpaid. Where the
whole of price has been tendered, and the seller refused
to accept such a tender, seller ceases to be an unpaid
seller. In such a case the seller loses all high right against
the goods.
Thank you!