SALE OF GOODS Lesson Note

Learning Objectives

At the end of the lesson, students should be able to:

DEFINITION OF SALE OF GOODS

The Sale of Goods Act 1893 defines sale of goods as a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a monetary consideration called the price.

TERMS OF CONTRACT OF SALE

The important terms of a contract of sale include:

The price is the amount of money agreed to be paid by the buyer for the goods purchased.

The price may be:

Determined directly by the contract; or

Left to be fixed in a manner agreed upon by the parties

For example, if a buyer agrees to purchase a refrigerator for ₦300,000, the ₦300,000 is the price.

The subject matter refers to the goods or property that are the object of the contract of sale.

The contract is concerned with the transfer of ownership of the goods from the seller to the buyer.

For example, if a person agrees to buy a particular car, the car is the subject matter of the contract.

A condition is a major or fundamental term of a contract which goes to the root of the contract.

A breach of a condition normally gives the innocent party the right to treat the contract as having come to an end, in addition to any other remedy that may be available.

Example: If a buyer orders a new refrigerator but the seller supplies a completely different type of appliance, there may be a breach of an important term of the agreement.

This is a major term which is subsidiary to the main purpose of the contract the breach of which only entitled the innocent party to damages but he cannot regard the contract as having come to an end

TERMINOLOGIES ASSOCIATED WITH CONTRACT OF SALE

A lien is the right to retain possession of goods, but not to sell them, until the amount due under the contract has been paid.

Example:

A mechanic may retain a customer's vehicle after repairs until the agreed repair bill is paid, where the law gives the mechanic such a right

Stoppage in transit refers to the right of an unpaid seller, in certain circumstances, to stop goods while they are being transported and retake possession of them.

This right may arise particularly where the buyer becomes insolvent while the goods are still in transit.

Example:

A seller sends goods to a buyer who subsequently becomes insolvent. Where the legal requirements are satisfied, the seller may stop the goods while they are still in transit

An unpaid seller is a seller of goods who has not received the whole of the price due under the contract.

A seller may therefore remain an unpaid seller where:

*The buyer has not paid anything; or

*The buyer has paid only part of the agreed price.

Example:

If goods cost ₦500,000 and the buyer pays only ₦300,000, the seller is still an unpaid seller in respect of the balance, subject to the terms of the contract and applicable law.

A contract of bailment involves the temporary transfer of possession of property from the bailor to another person, called the bailee, for a specific purpose. Ownership of the property does not necessarily pass to the bailee.

Example;

When a customer gives clothes to a dry cleaner to clean them, the customer is the bailor, while the dry cleaner is the bailee.

A gift is a voluntary transfer of property from one person to another without consideration or payment.

Unlike a sale, the recipient of a gift does not provide money as the price of the property.

Example;

A father gives his son a laptop without requiring payment.

Note: A gift is different from a contract of sale because a sale involves monetary

consideration, while a gift does not.

A contract of skill and labour is a contract in which the main purpose is the provision of labour or personal skill rather than the sale of goods.

Such a contract is generally distinguished from a contract whose main purpose is the sale of goods.

Examples:

* A contract to paint a portrait.

* A contract to repair a machine.

*A contract to provide certain professional services.

For example, where a painter is engaged mainly to produce a portrait through personal skill and labour, the transaction is a contract for skill and labour rather than simply a sale of goods.