Class Notes on Contract II – Unit V: Sale of Goods Act
1. The Contract of Sale
Definition:
- Contract of Sale: An agreement where the seller agrees to transfer or agrees to transfer the ownership of goods to the buyer for a price.
- Types of Sale Contracts:
- Sale: Transfer of ownership from the seller to the buyer.
- Agreement to Sell: Transfer of ownership to be made in the future or subject to certain conditions.
Essentials:
- Contract of Sale must involve:
- Goods: Moveable property.
- Price: Consideration in money or money’s worth.
Key Points:
- Goods: Can be tangible, moveable items.
- Price: Must be a definite sum.
Example: A contract where a seller agrees to sell 100 computers to a buyer at a specified price is a contract of sale.
2. Conditions and Warranties
Conditions:
- Definition: Fundamental terms of the contract which are essential to its performance.
- Nature: Breach of a condition allows the innocent party to terminate the contract and claim damages.
- Examples:
- Condition as to Title: The seller must have the right to sell the goods.
- Condition as to Description: Goods must match the description given by the seller.
Case Example: Arbuthnot v. Fagan [1922] 2 KB 471 – The breach of condition allowed the buyer to reject the goods.
Warranties:
- Definition: Secondary terms of the contract which are not central to its performance.
- Nature: Breach of a warranty allows for a claim for damages but does not entitle the innocent party to terminate the contract.
- Examples:
- Warranty of Quality or Fitness: Goods must be of satisfactory quality or fit for the purpose described.
Case Example: Breach v. R.S. Tilley Ltd [1958] 1 WLR 780 – The buyer could claim damages but could not reject the goods.
3. Passing of Property
Definition:
- Passing of Property: Transfer of ownership from the seller to the buyer.
- Principles:
- Transfer by Agreement: Ownership passes when the parties intend it to pass.
- Transfer by Delivery: Ownership passes when the goods are delivered to the buyer.
- Transfer by Sale of Specific Goods: Ownership passes when the specific goods are ascertained.
Rules:
- Specific Goods: Ownership passes when the goods are ascertained and agreed upon.
- Unascertained Goods: Ownership passes when the goods are delivered and agreed upon.
Case Example: Dixon v. Searle [1936] 2 All ER 194 – Transfer of ownership of goods in a contract where the goods were identified.
4. Transfer of Title
Definition:
- Transfer of Title: The legal right to ownership of the goods.
- Principles:
- Good Title: A seller must have a valid title to transfer to the buyer.
- Transfer by Estoppel: If the seller represents that they have the title, they cannot deny it later.
Rules:
- Voidable Title: A seller with a voidable title can transfer a good title to a buyer in good faith.
- Buyer in Possession: A buyer in possession of goods has the right to transfer title.
Case Example: Nesbit v. Wickham [1868] LR 3 QB 322 – Title of goods transferred based on the seller’s representations.
5. Performance of the Contract
Definition:
- Performance: Fulfillment of the contractual obligations by both parties.
- Obligations:
- Seller’s Obligation: To deliver the goods and transfer the title.
- Buyer’s Obligation: To pay the price and accept the goods.
Rules:
- Delivery: Must be made at the agreed time and place.
- Payment: Must be made as per the contract terms.
Case Example: Bunge Corporation v. Tradax Export SA [1981] 2 WLR 353 – Case involving specific performance and delivery terms.
6. Rights of Unpaid Seller Against Goods
Definition:
- Unpaid Seller: A seller who has not received the full payment for the goods sold.
- Rights:
- Right of Lien: To retain possession of the goods until payment is made.
- Right of Stoppage in Transit: To reclaim goods in transit if the buyer becomes insolvent.
- Right of Resale: To sell the goods to recover the unpaid price.
- Right to Sue for Price: To sue for the price of the goods if the buyer refuses to pay.
Cases:
- Lien: Sanderson v. Bower [1835] 12 Bing 228 – Seller’s right to retain goods for unpaid price.
- Stoppage in Transit: Re Hitchings (1878) 8 Ch D 266 – Seller’s right to reclaim goods in transit.
7. Remedies for Breach of Contract
Definition:
- Remedies: Legal solutions provided when one party fails to fulfill their contractual obligations.
Types:
- Damages: Monetary compensation for losses suffered due to the breach.
- Specific Performance: Court order requiring the breaching party to perform their contractual duties.
- Injunction: Court order restraining a party from doing something that constitutes a breach.
- Quantum Meruit: Claim for payment for work done when the contract is partially performed.
Case Example: Hadley v. Baxendale [1854] 9 Exch 341 – Principle of foreseeability in claiming damages for breach of contract.
