1.0 INTRODUCTION
In our daily life we usually enter into different types of contracts
one of them being the sale of goods contract. The sale of goods contract is
defined under the Sale of Goods Ordinance[1]
(herein below referred as Cap 214) as a contract whereby the seller transfers
or agrees to transfer the property in goods to the buyer for a money
consideration, called the price. The contract of sale of goods may be either
absolute or conditional[2].
2.0 MAIN BODY.
In a contract of sale the transfer of property in goods i.e.
ownership has to be ascertained so as to know at what time the property in
goods passes to the buyer. The ascertainment to know as to when ownership is
transferred is of paramount importance as it answers the following questions as
far as property is concerned; that at whose risk the goods are at a given
moment, who can pass a good title by resale/ other dealings with the goods and
to whom the goods belong in the event of bankruptcy of the buyer before the
payment of the price.
The general rule as far as the above proposition is that: unless
otherwise agreed, the goods remains at seller’s risk until the property therein
is transferred to the buyer, whereupon the goods are at the buyer’s risk
whether delivery has been made or not. In that regard therefore the
ascertainment as to the transfer of ownership has been dealt with by the rules
provided under section 20 of Cap 214.
To start with the first
rule in regard to the transfer of property in goods entails that; where there is unconditional contract for sale of specific goods in
a deliverable state, the property in goods passes to the buyer when the
contract is made, even though the time of delivery or time of payment or both
is postponed.
This rule entails that where the goods in a deliverable state are
identified and ascertained by the buyer and the transaction is unconditional the
property in goods passes to the buyer as was stated in the case of SADRU H SAID C/O SIDI V R[3].
In this case where the appellant sold the car to the complainant and after the
payment of the price was completed the motor vehicle remained at the premises
of the seller who in turn shifted the motor vehicle to the other place. The
court held that The appellant was liable on theft against section 265 of the
penal code as the property in goods has passed to the buyer pursuant to section
20 rule I of Cap 214 that in a contract of unconditional sale of specific goods
in a deliverable state the property in goods passes to the buyer at the time
when the contract is made.
The second rule in sale of
goods stipulates that, where there is a contract
for the sale of specific goods and the seller is bound to do something to the
goods for the purpose of putting them into a deliverable state, the property
does not pass until such thing is done and the buyer has notice thereof[4].
This rule is to the effect that title or property in goods will not pass at
some instances unless some conditions are first fulfilled by the seller and
thus any thing that happens there after will be at the sellers risk unless the
conditions are fulfilled. These conditions are subject to the agreement by the
parties in the respective contract.
In the case of CARLOS
FEDERSPIEL& COSA V CHARLES TWIGG & CO LTD[5] the court held that where the risk is still on the seller this may be
evidence that the property has not passed. Blackburn J, in the case of ALLISON V.
BRISTOL MARINE INS. CO LTD[6] stated that an obligation to insure placed
upon one party by the contract is also an indication that he bears the risk and
it has been said that this is an indication that he also has the property.
This was further stated by court in the case of ABDERSON V. RYAN, that the property is not to be passed to until
the repairing have been done. So according to this case repairing was the
condition to be fulfilled before the delivery of the goods and any thing that
happened before the repairing is upon the sellers’ risk. The rule was also emphasized
in the case of UNDERWOOD V. BURGH CASTLE
BRICK & CEMENT SYNDICATE[7].
Where it was held that the property in the engine had not passed to the
defendants, as the plaintiffs were bound to do something which they had not
done for the purpose of putting the engine into a deliverable state. The facts
of the case were that thee owners of engine agreed to sell it at a price ‘free
of rail’ in London .
It weighed 3o tons thus before it could be delivered on rail it had to be
detached and dismantled. The sellers detached it but in loading it on a truck
they damaged it by accident, so that the buyers refused to accept it. And thus
the sellers sued.
In case of the contract of
sale of specific goods, S 20 rule III of Cap 214
provides that, where there is contract of sale of specific goods in a
deliverable state but the seller is bound to weigh, measure, test or to do some
other act or thing with reference to the goods for the purpose of ascertaining
the price, the property does not pass until such act or thing is done and the
buyer has notice thereof.
This rule applies only to the acts, which must be done by the
seller; therefore the law has imposed duty on the party of the seller that, he
owes the duty to adhere those terms provided within the provision such that he
must weigh, measure and test for the purpose of determining the price contrary
to that the seller will be breaching the law and hence can not reject the
commodity if returned. However the rule deals with cases where the passing of
property is conditional upon the performance of some acts with reference to the
goods. Therefore the presumption embodied in this rule is probably somewhat
weaker than those in rule I & II because it is easy to imagine
circumstances in which the parties intend the property to pass at once,
especially if the price has been paid. This can be illustrated IN LORD ELDON V HEDLEY BROS[8]
where sold the haystacks for delivery at buyer’s convenience and the price was
paid at once though liable to adjustment when the hay was weighed on delivery.
Then it was held that the property passed at once.
Moreover, it is probable that goods/ property would be held to have
passed if the goods have been delivered, although the seller has still to do
something to ascertain the price; for instance by looking up the list price in
a catalogue. In NANKA BRUCE V COMMON
WEALTH TRUST LTD[9]
where A sold cocoa to B at an agreed price per 60lb, it being arranged that B
would resell the goods and the cocoa would then be weighed in order to
ascertain the total amount due from A to B. It was held that the weighing did
not make the contract conditional and that the property passed to B before the
price was ascertained.
All in all, reference has already been made to this rule, under
which in a sale of specific goods the passing of the property is postponed if
the seller is bound to weigh, measure, test or to do any other act for the
purposes of ascertaining the price.
This rule is confined to sell of specific goods, but it can also be
the same with the position of the sale of unascertained goods as was in the
case of NATIONAL COAL BOARD V GAMBLE[10].
Therefore in order to fulfill contract of sale of specific goods under this
rule, the seller should make sure he performs all the act of measuring,
weighing or testing in order to transfer the property in a deliverable state.
The fourth rule to
ascertain intention of the parties when property
passes to the buyer is provided for under section 20 rule IV of Cap 214. This rule
deals with a different type of transaction altogether, although it is very
similar to a conditional sale and may become a sale in due course[11]. It stipulates:
"When goods are delivered to
the buyer on approval or ‘on sale or return’ or other similar terms, the
property therein passes to the buyer –
(i) when he signifies his approval
or acceptance to the seller or does any other act adopting the transaction;
(ii) if he does not signify his
approval or acceptance to the seller but retains the goods without giving
notice of rejection, then, if a time has been fixed for the return of the
goods, on the expiration of such time if no time has been fixed, on the
expiration of a reasonable time; and what is reasonable time is a question of
fact."
On signification of acceptance to the seller, the buyer cannot
repudiate the contract of sale and reject the goods on the ground that there
was breach of contract. This is well illustrated in the case of MUSA MAHABA V. RUKIA SHAMTE[12].
In the case, the respondent offered to sell the appellant a Singer Sewing
Machine. The appellant accepted the offer and price were agreed. The appellant
paid half price with an agreement that the rest be paid by monthly installment,
and the appellant receives the machine on the same date and took it to his
home. The respondent left her home for two months and to that time, the
appellant had not paid the first installment. On demand, the appellant refuse
to pay asserting that it was not of a singer make and that it was not in proper
working order and he demanded the refund of his half price and to the
respondent to collect her sewing machine. The respondent rejected the
repudiation of the contract and referred the matter to the court.
The court held, inter alia, that the right to repudiate a contract
and reject the goods on the ground of breach of contract cannot be exercised
after the buyer has accepted the goods. The court also held and explain that a
buyer is deemed to have accepted the goods when intimates to the seller that he
has accepted the goods or retains them without indicating that he has rejected
them, or does any act which is inconsistent with the ownership of the seller.
Likewise, under the rule, the buyer will have his intention implied
when he signifies his approval or acceptance to the seller or does any other
act adopting the transaction. The case of
KIRKHAM V. ATTENBOROUGH[13]
gives illustration. In the case, a jewellery was sent by A to B "on sale
or return". B pledged the jewellery with C. It was held that the pledge
was an act adopting the transaction, so that the property passed to B, and C
was entitled to retain the jewellery.
Another aspect of transfer under the rule regards to properties sent
by the seller with condition not to change the title to the property, unless
the buyer pay for them. Here, if goods are sent with an approval note showing
that they are remain the property of the seller until paid for in cash or
invoiced, then the property does not pass until this condition has been
satisfied; and if such goods are improperly dealt with , the seller may recover
them.
Goods may also be delivered on sale or return where they are
delivered to a person who intends not to buy them himself but to sell them to
third parties as was in POOLE V. SMITH’S
CAR SALES LTD[14]
where the plaintiff supplied two cars to the defendant, at the end of August,
on understanding that if he latter did not sell them, they should be returned to
the plaintiff. Only one car was sold, and the plaintiff made repeated requests
in October for return of the other. On 7th November, he wrote to the
defendants saying that if the car had not been returned by 10th
November, it would be deemed to have been sold to the defendants. The car was
returned some weeks later in damaged condition. The plaintiff rejected it and
sued for the price of the car. As to whether the property was transferred to
the buyer, the court held that the contract was one of sale or return,
notwithstanding that the defendants did not intend to buy the car themselves,
so that the property would pass to the defendants on the expiration of a
reasonable time, in the absence of rejection or any contrary intention being
shown. In the opinion of the court, in circumstances having regard to the
seasonal decline in the second-hand car market, a reasonable time had expired
without the car being returned, and the defendants were therefore liable to pay
the price.
Under the rule thus, if a time has been fixed for the return of the
goods, the buyer is deemed to have exercised his option to buy them if he
retains them after this time. Generally, Rule IV sets the limits of the buyer
in the contract of sale. It sets conditions on which he can deal with the
goods, or perform the contract after he had already accepted the goods or
otherwise signify his willingness to accept them.
The fifth rule regarding
the transfer of property in goods as stated by R.
A. Anderson[15]
is to the effect that generally a person can not make a present sale of non
existent or future goods or goods not owned, a person can make a contract to
sell such goods at a future date but not having the title, and hence no sale.
For example an agreement made today that all fish caught on a fishing trip tomorrow
shall belong to a particular person does not make that person the owner of
those fish today.
When the parties purport to affect a present sale of future goods,
the agreement operates only as a contract to sell the goods. Thus a farmer
purporting to transfer the title today to a future crop would be held subject
to a duty to transfer that crop when it came into existence. If the farmer did
not keep the promise, suit could be brought for breach of contract; but the
contract will not operate to vest the title in the buyer automatically.
The proposition above is similarly reflected in our law[16]
where it is stated that where there is a contract for the sale of unascertained
or future goods sold by description, the property passes to the buyer when
goods of that description and in a deliverable state are unconditionally
appropriated to the contract by one party with the assent of the other such
assent may be express or implied and may be before or after the appropriation
is made. The law further explains the same rule by adding that such
unconditional appropriation can be made by the seller delivering the good s to
the buyer, or to a carrier on his behalf, without reserving the right of
disposal.
CONCLUSION
To conclude generally, the contract of sale of goods entails that
the property in goods have to be transferred from the seller to the buyer but
however for the ownership to shift from the seller to buyer the rules under
section 20 of Cap 214 have to be ascertained for the sake of knowing as to
which rule applies in the specific contract of sale. It follows as the day
follows night that the rules explained above have to be understood by the
parties to a contract of sale as the create legal obligation to the parties
even if they have not expressly indicates them as applicable to their contract.
BIBLIOGRAPHY
STATUTES
BOOKS
Atiyah, P. S, (1985), the Sale of
Goods, 7th Edition, Pitman Publishing, London .
Anderson, R. A, (1980), Business
Law, 11th Edition, South Western Publishing Company, Ohio .
[1] Section 3 (1) of the sale of Goods Ordinance cap 214 of 1931
[2] Section 3 (2) ibid
[4] Section 20 rule II ibid
[5] [1957] 1Llyod’s Rep 240 at 255
[6] [1876]1 App case 209, at 229
[7] [1922]1 K.B
[11] P.S Atiyah : The Sale of Goods, p.231.
[12] [1979] LRT n. 6.
[13] [1989] 1QB 201.
[14] [1962] 2 All ER 482.
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