“S39 of the sale of goods act creates a friction that delivery to a carrier or a where finger is prima-facie deemed to be a delivery of the goods to the buyer subject to the fact the seller makes such delivery in pursuance of a contract. – explain”
1. Introduction¹
The law relating to sale of goods is principally governed by the Sale of Goods Act
(SOGA).The general principles that relate to contracts e.g. offer, acceptance, consideration that
apply to a contract of sale of goods and the parties are free to agree on the terms which
will govern their relationship. The SOGA however lays down certain terms intended to
Protect a party to the contract as well as rules of general application where the parties fail
to provide for contingencies, this may interrupt the smooth performance of a contract of
Sale e.g. destruction of things sold before delivery.¹
2. Definitions?
Delivery to carrier or wharfinger means –
(1) Where, in pursuance of a contract of sale, the seller is authorized or required to send the goods to the buyer, delivery of the goods to a carrier, whether named by the buyer or not, for the purpose of transmission to the buyer, or delivery of the goods to a wharfinger for safe custody, is prima facie deemed to be a delivery of the goods to the buyer.
(2) Unless otherwise authorized by the buyer, the seller shall make such contract with the carrier or wharfinger on behalf of the buyer as may be reasonable having regard to the nature of the goods and the other circumstances of the case. If the seller omits so to do, and the goods are lost
Or damaged in course of transit or whilst in the custody of the wharfinger, the buyer may decline to treat the delivery to the carrier or wharfinger as a delivery to himself, or may hold the seller responsible in damages.
(3) Unless otherwise agreed, where goods are sent by the seller to the buyer by a route involving sea transit, in circumstances in which it is usual to insure, the seller shall give such notice to the buyer as may enable him to insure them during their sea transit, and if the seller fails so to do, the goods shall be deemed to be at his risk during such sea transit.?
3. Nature of a Contract of Sale of Goods¹
Contract of Sale of Goods defines a “contract of sale of goods” 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.
From the definition, the following are the essential characteristics of a contract of sale of
Goods;
1. Parties; There must be two distinct parties to a contract of sale of goods, that is, a Buyer and a seller.
2. www.indiankanoon.org/doc/1191245
1 .http://220.227.161.86/168131930
2. Transfer of property; in this context, “property” means ownership. A mere transfer of possession of the goods will not suffice; the seller must either transfer or agree to transfer the property in the goods to the buyer in order to constitute a contract of sale of goods.
3. Goods; the subject matter of the contract must be “goods” which are defined under
S.1 (h) to include all chatters personal other than things in action and money, and all
emblements, industrial 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.
“Chattels” – movable property
“Emblements” – cultivated growing crops which are produced annually.
4. The price; Consideration for a contract of sale of goods must be money and it’s called the price
5. No formalities to be observed; There are no formalities prescribed under the SOGA to
be fulfilled, in order for a valid contract of sale to be concluded. The contract may be
oral or written or both or it may be implied from the circumstances.
The following are the consequences which flow from a sale and an agreement to sell;
(a) Transfer of property (ownership); In a “sale”, property in the goods passes to the
buyer at the time of making the contract, with the result that the seller ceases to be
the owner of the goods while the buyer becomes the owner thereof and the buyer
acquires a “jus in rem” i.e. a right to enjoy the goods against the whole world.
Whereas in “an agreement to sell”, the property in the goods is not transferred to
the buyer at the time of the contract, with the result that the parties acquire only a
“jus in personam” i.e. a right to either the buyer or the seller against the other for
any default in fulfilling his part of the agreement.
(b) Passing of Risk of Loss; The general rule is that unless otherwise agreed, the risk
of loss prima facie passes with property. Thus, in case of a “sale, if the goods are destroyed, the loss falls on the buyer, even though he may never have taken possession of them
(c) Effect/Consequences of Breach; In case of a “sale”, if the buyer wrongfully
neglects or refuses to pay the price of the goods, the seller can sue for the price,
even though the goods are still in his (seller?s) possession.
(d) Right of Resale; In case of a “sale”, the property passes to the buyer and as such,
the seller in possession of the goods after sale cannot resell them. If he does so,
the subsequent buyer who has knowledge of the previous sale does not acquire a
title to the goods and the original buyer can sue as owner of the goods and recover
them from the third person/subsequent buyer. The original buyer can also sue the
seller for breach of contract or in tort for conversion. However, the right to
recover the goods from the third person is lost if the subsequent buyer had bought
the goods bonafide [in good faith] and without notice of the previous sale.
(e) Insolvency of buyer before payment for the goods; In case of a sale, “the seller”
will be required to deliver up the goods to the official receiver, whereas in the
case of “an agreement to sell”, the seller may refuse to deliver the goods to the
official receiver unless they have been paid for.
(f) Insolvency of seller before delivering the goods but after the buyer has already
paid the price; In case of a “sale”, the buyer would, in the circumstances, be
entitled to recover the goods from the official receiver since the property in the
goods rests with him.¹
1. http://220.227.161.86/168131930
4. TERMS OF A CONTRACT OF SALE OF GOODS¹
Conditions and warranties:
A sale of goods contract contains several terms regarding the description and quality of
goods, the price and mode of payment, the time and place of delivery etc. However,
these terms differ in terms of importance. Accordingly, terms are divided into conditions
and warranties.
A condition is a stipulation which is essential to the main purpose of the contract.
A warranty on the other is a stipulation which is collateral to the main purpose of the
contract and breach of which gives the aggrieved party a right to sue for damages only,
and not to repudiate the contract.
Note that there are no hard and fast rules in determining whether a stipulation is a
condition or a warranty.
Express and Implied Terms:
Terms of a contract may either be express or implied. Express termsare those which are
Inserted in the contract at the will of the parties, while implied termsare those presumed
to exist in a contract by operation of law even though they have not been provided
for/stipulated by the parties in the contract. However, implied terms may be negative or
varied by express agreement or by course of dealing between the parties or by usage of
trade – S.54, SOGA.
IMPLIED CONDITIONS:
1. Condition as to title; In every contract of sale of goods, the seller implies that
in case of a sale, the seller has the right to sell the goods, and that in the case of an
agreement to sell, the seller will have a right to sell the goods. A seller will have a right to sell if he/she is the owner of the goods or the agent of the owner. So if the seller’s title turns out to
be defective, the buyer is entitled to reject the goods and recover the price.
2. Condition in a sale by description; Where there is a contract of sale of goods by
description, there is an implied condition that the goods shall correspond with the
description – S.14. The description may be in terms of the quality, quantity,
packaging, model, manufacturer, etc. Lord Blackburn in Bowes V Shand
(1877)2 A.C 455 had this to say;
“If you contract to sell peas, you cannot oblige a party to take
beans. If the description of the article tendered is different in
any respect, it is not the article bargained for and the other
party is not bound to take it.”
It should be noted that the fact that the buyer has examined the goods will not
affect his right to reject them, if the deviation of the goods from the description is such as which could not have been discovered by casual examination.
3. Condition in a sale by sample;
A contract of sale is said to be a sale by sample where there is a term in the
contract, express or implied to that effect. In the case of contract of sale by
sample, that is; where goods are to be supplied according to a sample agreed upon.
Section 6 provides that the following conditions are implied;
(i) that the bulk shall correspond with the sample in quality;
(ii) that the buyer shall have a reasonable opportunity of comparing the bulk
with the sample;
(iii) that the goods must be free from any defect rendering them
unmarchantable, which would not be apparent on reasonable examination
of the sample, i.e., if the defect is apparent, that is if it is easily
discoverable by the exercise of ordinary care and the buyer takes delivery
after inspection, there is no breach of implied condition and the buyer has
no remedy.
4. Condition where a sale is by both sample and description; S.4 provides that if
goods are sold by sample as well as by description, there is an implied condition
that the bulk of the goods shall correspond with both the sample and the
description.
5. Condition as to fitness for purpose; By virtue of S.15 (a), an implied condition
is deemed to exist on the part of the seller, that the goods supplied shall be
reasonably fit for the purpose for which the buyer wants them, provided the
following conditions are fulfilled;
(i) the buyer should have expressly or impliedly made known to the seller the
particular purpose for which the goods are required;
(ii) the buyer should rely on the seller?s skill and judgment;
(iii) the goods sold must be of a description in which the seller deals, in the
ordinary course of his business, whether he is the manufacture or not.
If the goods to be supplied can be used for several purposes, the buyer must
expressly make known to the seller the specific purpose for which he needs the
goods.
It should further be noted that the implied condition as to fitness applies only in
case of sale of goods to a normal buyer. If the buyer is suffering from an
abnormality such as an allergy, he must make such abnormality known to the
seller, otherwise the seller will be discharged. He won’t be liable for any injury
suffered.
Sale Under Patent or trade name; the proviso to S.15(a) is to the effect that in
case of a contract for sale of a specified article under its patent or other trade
name, there is no implied condition as to its fitness for any particular purpose.
This is so because under such circumstances, the buyer does not rely on the
seller?s skill and judgment but relies on the good reputation which the goods have
acquired and buys on the strength of that reputation. The seller’s duty therefore is
limited to supplying the goods of the same trade name as demanded by the buyer.
There is no implied condition as to fitness for any particular purpose.
However, the condition as to fitness will still apply if the buyer relies on the
seller?s skill and judgment as regards suitability of the goods for a particular
purpose made known to the seller, even though the goods are described by their
trade name.
6. Condition as to merchantability – S.15 (b)
S.15(b) provides that there is an implied condition that goods shall be of
merchantable quality. The seller may only be in breach of this condition where
the following requirements are fulfilled;
(i) the goods must be bought by description
(ii) the seller should be a dealer in goods of that description, whether he be the
manufacturer or not; and
(iii) the buyer must not have any opportunity of examining the goods or the
goods should have some latent defect which is not apparent on reasonable
examination of the goods.
Implied Warranties:
1. Warrant of quiet possession;
S.13 (b) provides that in a contract of sale, there is an implied warranty that the
buyer shall have and enjoy quiet possession of the goods. Where such quiet
possession is disturbed in any way by a person having a superior right than that of
the seller, the buyer would be entitled to claim damages from the seller. However,
note that this warrant may be regarded as an extension of the implied condition to
title, since disturbance of quiet possession is likely to arise only where the seller’s
title to goods is defective.
2. Warranty of freedom from encumbrances;
S.13(c) further provides that in a contract of sale, there is an implied warranty that
the goods shall be free from any charge or encumbrance in favour of any third
party, not declared or known to the buyer before or at the time when the contract
is made. If the buyer discovers afterwards that the goods are subject to a charge
which he/she has to discharge, there would be breach of an implied warranty and
the buyer would be entitled to damages. E.g. where goods sold had been
previously pledged and then sold off before satisfaction of the pledge amount or
where the goods are sold subject to a lien which was not known to the buyer.
Note: All the above implied terms are duties imposed by law upon the seller and
in addition to the above, the seller also has the following duties;
(a) Duty to deliver the goods;
S.27 imposes a duty on the seller to deliver the goods.
S.1 (d) defines “delivery” to mean voluntary transfer of possession from
one person to another. Delivery may take any of the following forms;
(i) Physical transfer of the actual goods;
(ii) Handing over to the buyer the means of control over the goods, e.g.
where car keys or keys to a warehouse where the goods are kept
are handed over to the buyer.
(iii) Delivery by attornment e.g. where the seller gives the buyer a
delivery order or warrant for goods stored in a warehouse. Note
that the person in charge of the warehouse must accept the order or
warrant.
(iv) Delivery of documents of title to buyer e.g. the Bill of Lading, or
warehouse certificate.
(v) Where the goods at the time of sale are in possession of a third
party and such third party acknowledges to the buyer that he holds
the goods on his behalf.
(vi) Delivery to the buyer?s agent or to the carrier. S.33(2) provides
that where the seller is authorized or required to send the goods to
the buyer, delivery of the goods to the carrier for purposes of
transmission to the buyer is prima facie deemed to be a delivery of
the goods to the buyer. The seller is required, under S.33(2) to
make a contract with a carrier on behalf of the buyer as may be
reasonable, having regarding to the nature of the goods and the
circumstances of the case.
Note: S.29 (1) provides that whether it is for the buyer to take possession
of goods or for the seller to send them is a question depending on the
construction of the contract. The section further provides that the place of
delivery is the sellers? place of business or his residence. However, where
the contract is for sale of specific goods [i.e. goods which are identified
and agreed upon at the time the contract is made], which to the
knowledge of the parties, when the contract is made, are in some other
place, then that place is the place of delivery.
The relevance of delivery is provided for under S.29 which provides that
payment and delivery are prima facie concurrent conditions i.e. the seller
must be willing to give possession of the goods to the buyer in exchange
for the price, and the buyer must be ready and willing to pay the price in
exchange for possession of the goods.
Time of delivery; S.11 provides that whether a stipulation as to time is of
the essence depends on the terms of the contract
S.29 (2) provides that where the seller is bound to send the goods to the
buyer but no time for sending them is fixed, the seller is bound to send
within a reasonable time, while S.29(4) provides that delivery is
ineffectual unless made at a reasonable hour. What is a reasonable hour
depends on the circumstances of the case.
(b) Duty to deliver the right quantity; The seller has a duty to deliver goods
of the right quantity.
S.30(1) provides that where the seller delivers to the buyer a quantity of
goods less than what he contracted to sell, the buyer may reject them but if
the buyer accepts the goods, he must pay for them at the contract rate.
S.30(2) provides that where the seller delivers a quantity larger than that
contracted for, the buyer may reject the excess or he may reject the whole.
Where the buyer accepts the whole of the goods delivered, he must pay for
them at the contract rate.
Further, S.30(3) gives the buyer an option to reject the goods where they
are delivered, mixed with goods of a different description not included in
the contract, although the buyer may accept goods conforming to the
contract and reject the rest.¹
1. http://220.227.161.86/168131930
5. CONCLUSION?
Property in the goods or beneficial right in the goods passes to the buyer at a point of time depending up ascertainment, appropriation and delivery of goods. Risk of loss of goods prima facie follows the passing property in goods. Goods remain at the seller’s risk unless the property therein is transferred to the buyer, but after transfer of property therein to the buyer the goods are not at the buyers risk whether delivery has been made or not.
An important role regarding passing of the title in goods is that the purchaser does acquire no better title to the good than what the seller had.
This rule again is not applicable under certain circumstances.
Delivery of goods denotes the voluntary transfer of possession, which may be actuality or even in some constructive form and which is again subject to various rules which help in deciding when the delivery becomes effective.?
3. http://220.227.161.86/19635chapter-2.pdf
6. Bibliography
1) http://220.227.161.86/19635chapter-2.pdf