The Sale of Goods Act

Introduction

The Sale of Goods Act is a stem of the general law of contract, and through its case law, it has helped in developing the general law to a considerable degree. The contents of this law are a product of the developments in the nineteenth century. The features of the Sale of Goods law, such as the contents of the contract, passing of property, termination and remedies for the breach of the contract, were formulated in the nineteenth century judgments during the periods of Lord Blackburn and Lord Ellenborough (Bridge 1997, p. 1). The rules of the common law provided in the Sale of Goods Act are made applicable in the contracts for the sale of goods (Gillies 1988, p.403). Gillies further proceeds to argue that the equity in the contracts for sale of goods provides remedies. Some of the remedies provided may include injections and the specific performance of the contractual liabilities.

This law is related to the selling and buying of goods. Goods here will entail things that may form a part of land and products that need to be identified before a sale. Generally, people mostly prefer keeping their wealth in a form of property. This means that after some time, people may be willing to trade their property. The Sale of Goods law involves a contract, where the seller agrees to transfer his or her property in goods to a willing buyer for a certain set price. Most of times, the price paid is in terms of money. A contract of sale is generally an expression that consists of an agreement and sale. According to the contract of sale, the transfer of the property in goods is termed as sale. Under the section 4 of the Act, the agreement to sale is clearly defined. The transfer of the property in goods only takes place in future according to the contract of sale, which is known as an agreement to sell.

Contents of the Contract and Implied Terms

The essential elements that help in constituting a valid contract are the following (Bose 2010, p.109): 

Contract: The contract of sale should present all the significant elements in a legal contract.

Parties: A contract of sale is only composed of the buyer and the seller. It should be noted that a sales contract has only two parties.

General property transfer: The contract of sale should show the transfer of the property in goods. It should clearly indicate the rules that pertain to the transfer of the specific and unascertained property from the seller to the buyer.

Price:  In order to transfer goods from the seller to the buyer, a price needs to be set. The contract should clearly show the amount and time, when the price needs to be paid.

 The following are the obligations to the seller and the buyer according to contract of sale of goods (Marsh & Soulsby 1981, p.180).

Obligations of the Seller

In section 27 of the Act, it specifies the main obligations of the parties willing to trade, namely it is the seller, who has to deliver the goods in time, and the buyer, who must accept and should pay for these goods as stipulated in the contract of sale of goods. The contract should try to specify the quantity, time, quality, title and place of delivery of the good. The seller should, therefore, deliver what he or she expressed in the contract.

Obligations of the Buyer

The Sale of Goods law specifies that the buyer is supposed to accept the goods and pay the right amount in the relevant time as stipulated in the contract. The contract fixes the correct amount of the price that the buyer is supposed to pay. According to most of the contracts, the time of payment is actually on delivery. The buyer breaks the contract if he or she fails to accept the goods.

Passing of Property and Risk

In terms of the property transfer between the buyer and the seller, it must be noted that the basic aim of the contract is to pass or transfer goods from the seller to the buyer. The law of sale of goods clearly specifies when goods should be transferred. The distinction between unascertained and specific goods helps to determine when the ownership passes. Specific goods are defined as those goods that are spotted and agreed upon during the time, when the contract is being set. The buyer should, therefore, try to identify the specific goods that he or she wishes to buy. Unascertained goods refer to those types of goods that are not specific (Fisher & Fisher 1998, p.151)

According to the section 17 in the Act, the property in specific goods only passes when the parties in the contract intend to pass it. In case the parties fail to specify when the ownership of the specific property needs to be passed, then the section 18 fully explains various rules that should be followed. The section 16 of the Act defines how unascertained goods are passed. It clearly shows that goods need to be ascertained in contracts related to the sale of unascertained goods, so that the property in the goods can be transferred. The agreement can sometimes be avoided. This only occurs, when there is an agreement in selling the specific goods, and it happens that they spoil them prior to the risk passing to the buyer, without any fault from either of the two parties. Any losses that might occur after the property has been passed falls to the buyer as explained under the section 20.

Formalities of the Contract

The Sale of Goods Act specifies that unless certain formalities are obeyed in a contract that involves the sale of goods, then it will not be enforceable. The buyer should accept some of the goods sold and sign a written memorandum, so that the contract can be enforceable (Gillies 1988, p.405). 

Transfer of Title

According to the general rule, when goods are sold by a person, who has no ownership on them, then the buyer acquires a good title for them. The rule that no one should give out what he or she does not have protects the true owner of the goods. This rule has the following exemptions (Hussain, 1978; p.238): 

Voidable title sale: When the title of a seller, who has a voidable title of the goods, is not avoided during the time of sale, the buyer acquires a good title of the goods.

Mercantile agent sales:  Mercantile agents can give good titles to the buyer, given that he or she receives in good faith.

Court order sales: The purchaser of goods acquires a good title if he or she buys them under an order of the court.

Estoppels’ title: Estoppels arise, when the owner of the good makes the buyer to believe that he or she has the right to sell the good, which, in turn, makes the buyer to have a better title of the good.

Performance of the Contract

The seller has the duty to pass the goods in the right time to the buyer. The buyer also should accept and then pay for the goods as stipulated in the contract. If the contract does not specify the place of delivery, then the buyer should obtain the good from the seller’s business. The seller should also bear the expenses that may occur to put the goods into a state of delivery (Hussain 1978, p.239). 

Remedies of the Breach of a Contract

Buyer Remedies

In cases, where the seller does not obey one of his or her obligations in the contract, then the buyer is entitled to the remedies shown below:

Breach of contract damages: when the seller fails to deliver goods in time or fails to deliver at all, it causes losses to the buyer. Damages due to the breach of the contract are measured directly from the amount of loss that the buyer incurs (Marsh & Soulsby 1981, p.185).

Rights to reject the goods and end the contract: the buyer has the right to end the contract and reject the goods, when the breach of implied terms is substantially serious. These terms are well explained in the Sale of Goods Act of 1994. When the seller delivers large quantities of the goods, the buyer has the right to reject that amount, which is above the amount set by the contract.

Seller Remedies

Action for the price: when the specified date set in the contract for payment has already passed, and the buyer has not remitted his or her price, then the seller has the right to sue for the price of the contract.

Non-acceptance damages: in case the buyer fails to pay and accept the goods, then the seller must claim for damages. Losses occur to the seller in the event of the goods being rejected or the buyer failing to pay the stipulated price in the contract. Therefore, damages are measured by the amount of loss that the seller faces (Marsh & Soulsby 1981, p.189).

Conclusion

In case this law is to be revised, it should clearly indicate that it is seldom mandatory and presumptive. Those willing to change the provisions in the Sale of Goods law should not underestimated its contractual brevity and the statutory inertia (Bridge 1997, p. 2). It should be noted that the Sale of Goods Act was not meant to revise the twentieth century conditions of the law of sale. It should also be noted that the Sale of Goods Act of 1994 was meant to stop the market rule of transferring titles to goods. In 1930s, there was a unification of the international sales law that needed to be account for in the Sale of Goods law. Under the Sale of Goods law, one is able to distinguish a sale and bailment. It has been shown that under a sale, the ownership of goods is completely transferred from the seller to the buyer. A bailment, on the other hand, is where there is no ownership transferred to the bailee.