Sale of goods

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Chapter 11

• Sale of goods

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Chapter overview

• This chapter looks at the concepts of
• Evolution of the Sale of Goods Act
• Contract of sale of goods
• Sale and agreement to sell
• Possession of goods
• Disposal of goods
• Transfer of title by non-owners
• Performance of contract
• Implied terms
• Remedies for breaches
• Vienna Sales Convention

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Sale of Goods Act

• Evolved from practices of buyers and sellers
• Australia adopted UKs Act
• Each state and territory passed similar statutes
• See Table 47
• Applies to all contracts involving sale of goods
  commercially or for everyday use

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Contract of sale of goods

• Seller transfers/agrees to transfer goods to
  buyer for money
• Payment is consideration known as price
• Principles in common law of contracts also apply
  to contracts of sale of goods

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Contract of Sale of Goods

• Most important matters to appear in contract of
  sale
• goods
• consideration in form of money
• transfer of property

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Goods

• Most forms of movable personal property used in
  trade or commerce that require carriage from one
  place to another
• Also include things attached to or forming part
  of land

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Goods

• Four categories
• Existing goods
• owned by seller at time contract made
• Future goods
• manufactured or acquired by seller after contract
  made
• Specific goods
• agreed and identified at time contract made
• Unascertained goods
• cannot be identified with certainty at time
  contract made

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Consideration in form of money

• Consideration must pass between parties
• Consideration (money) must exist for contract of
  sale to be valid
• Goods provided free or transferred by barter are
  not governed by Act
• Price may be fixed or negotiated
• Where price not specified, buyer has to pay a
  reasonable price

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Transfer of property

• Ownership of goods is transferred

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Capacity to buy/sell

• If goods purchased by people in category
  restricted from entering into contracts, but they
  purchase necessaries, then they must pay a
  reasonable price

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Sale agreement to sell

• Contract of sale of goods includes
• Executed contract
• exists when actual sale of goods occurs
• ownership transferred at time contract made
• Executory contract
• arises when agreement to sell formed
• goods are transferred at some future time
• agreement to sell becomes sale when goods
  delivered

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Ownership of property

• Possession of goods does not mean you are owner
• Possession may be temporary
• Intention of parties regarding when ownership of
  property passes from seller to buyer important
• Rules provided by Act
• see page 322

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Disposal of goods

• Romalpa clause
• Legal ownership of goods remains with seller
  until buyer has made full payment

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Transfer of title by non-owner

• Title legal ownership of property
• Nemo dat rule
• buyer receives same rights to goods as ones
  possessed by seller
• If goods taken from rightful owner, he/she
  entitled to remover them

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Nemo dat exceptions

• People not owners of goods are entitled to sell
• Special common or statutory powers of sale
• Pawnbrokers, sheriffs, innkeepers, bailiffs

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Nemo dat exceptions

• Market overt
• Estoppel
• Sale under a voidable title
• Seller in possession of goods but sells to a
  third party
• Buyer in possession
• Factors or mercantile agents

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Performance of contract

• Completion of contract of sale
• Seller and buyer have duties to ensure
  performance of contract successfully takes place
• See Tables 48 and 49

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Implied terms

• Implied conditions and warranties to protect
  buyers where application of common law would lead
  to unjust outcome
• Implied condition purpose of contract

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Implied conditions

• Implied conditions as to title
• Without title, seller cannot transfer ownership
  to buyer
• Implied conditions as to sale of goods by
  description
• Impose obligation on seller and manufacturer
  where sale made in course of business

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Implied conditions

• Implied conditions as to fitness for purpose
• goods must be reasonably fit for the purpose for
  which they were bought
• Implied conditions as to merchantable quality
• goods are capable of function they are made to
  perform or function reasonably expected by buyer

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Implied warranties

• Goods having a clear title without a third party
  claiming any financial interest
• Implied warranty quiet possession
• Implied warranty goods free from charge or
  encumbrances

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Remedies for breach of contract of sale

• For unpaid seller
• has not received full payment
• has rights against goods, but differ depending on
  whether goods have already passed to buyer
• has rights against buyer where buyer refuses or
  neglects to accept delivery

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Remedies for breach of contract of sale

• For buyer
• purchaser of goods from seller
• has rights against seller where seller has not
  delivered goods or goods have defect
• claim damages
• specific performance
• buyer may rescind from contract

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Vienna Sales Convention

• United Nations Convention of Contracts for the
  International Sale of Goods 1986 often called
• Vienna Sales Convention
• International Convention for Sale of Goods
• Regulates contracts for sale of goods between
  signatory countries

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Chapter review

• In this chapter you have looked at
• Evolution of the Sale of Goods Act
• Contract of sale of goods
• Sale and agreement to sell
• Possession of goods
• Disposal of goods
• Transfer of title by non-owners
• Performance of contract
• Implied terms
• Remedies for breaches
• Vienna Sales Convention