SALE OF GOODS
Part 1
Mevan Kiriella Bandara
What is Sales of Goods
• Sale of Goods is the most common way
on which ownership passes from one
person [SELLER] to another [BUYER]
• APPLICABLE LAW:
Sale of Goods Ordinance No. 11 of 1896 (as
amended)
Identical to the English Law
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A CONTRACT FOR SALE OF
GOODS
• S. 2(1) – SALE OF GOODS ORDINANCE
“A contract of sale of goods is a contract whereby the seller
transfers or agrees to transfer the property in goods to the
buyer for a money consideration, called " the price". There
may be a contract of sale between one part-owner and
another.”
• Sale / Agreement to Sell
SALE – When the Property in the goods are
transferred.
AGREEMENT TO SELL – when the Transfer of
Property takes place at a future time
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A CONTRACT FOR SALE OF
GOODS
• When does an Agreement to Sell become
Sale?
When time lapses or the conditions are
fulfilled
• Most important elements in a Sale of
Goods Contract:
1. The Goods
2. The Money Consideration
3. Capacity to Contract
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WHAT ARE “GOODS”?
S. 59 Sale of Goods Ordinance:
“goods" include all movables except moneys.
The term includes 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
-Money is not a “good” – Commemorative coins
or currency notes?
-Gas and Electricity ?
- Blood? – R v Australian Red Cross [1991]
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WHAT ARE “GOODS”?
• Anything attached / forming part of a Land
or Building?
• If any item is part of a Land or Building cannot be
severed without damaging it, it is not a good.
• Music?
• Computer Software?
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CONSIDERATION
• Money
• Part Money and Part Goods?
CAPACITY
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WHAT IS NOT A CONTRACT FOR
SALE OF GOODS
1. CONTRACT FOR WORK AND
MATERIAL
Goods Vs. Skills
Lee Vs. Griffin (1861)
Robinson Vs. Graves (1935)
2. CONTRACT OF HIRE PURCHASE
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HOW A CONTRACT OF SALE OF
GOODS ARE MADE
1. Writing and/or Verbally
2. Implied by the conduct of the parties
A CONTRACT FOR THE SALE OF
GOODS WILL BE ENFORCEABLE BY
ACTION ONLY IF:
1. The buyer shall accept part of the goods
so sold, and actually receive the same; or
2. If some note or memorandum is in writing
and is signed by the party to be charged
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SUBJECT MATTER OF THE
CONTRACT
“Goods” VS. “Future Goods”
If in a contract for the sale of Specific
Goods, the goods have, without the
Seller’s knowledge, perished at the time
when the contract was made, the contract
is Void. [S. 7]
How is it when there is an “Agreement to
Sell”?
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SALE OF GOODS BY
DESCRIPTION
• GOODS MUST CORRESPOND
DESCRIPTION
• Reliance on the description is necessary
Moore Vs. Landaner [1921]
Arcos Vs. Ranaasen [1933]
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IMPLIED CONDITIONS AS TO
QUALITY OR FITNESS
GENERAL RULE:
Every buyer must satisfy himself as to the
quality or fitness of the goods he is buying. If
he decides to buy a good he must be
satisfied.
CAVEAT EMPTOR rule: BUYER BE AWARE
The buyer must take care and see that he is
buying the good he wants
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IMPLIED CONDITIONS AS TO
QUALITY OR FITNESS
• Exceptions:
1. When the Buyer, expressly or by implication,
makes known to the seller the particular
purpose for which the goods are required so
as to shown that he relies on the seller’s skill
and judgment, then the goods sold must be
reasonably fit for that purpose. [S. 15(1)]
Frost Vs. Aylesbury Diary [1905]
Grant Vs. Australian Mills [1936]
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IMPLIED CONDITIONS AS TO
QUALITY OR FITNESS
2. Goods must be of a Merchantable Quality
when goods are bought by description from a
Seller who deals in goods of that description
(whether he be a manufacturer or not)
What is Merchantable Quality?
i. They have defects unfitting them for their
ordinary use; or
ii. Their condition is such that no one, with
knowledge of their true condition would
have bought them.
Wren Vs. Holt [1703]
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SALE OF GOODS BY SAMPLE
A Contract of Sale is a contract for sale by sample
where there is a term in a contract expressly or
implied to that effect.
Applicable rules:
1. The bulk sold must correspond in quality with the
sample sold shown to the buyer;
2. The Seller must give a reasonable opportunity for
the Buyer to inspect the bulk with the sample;
3. Must be of merchantable quality
Drummond v Van Ingen [1887]
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IMPLIED CONDITIONS AND
WARRANTIES IN A CONTRACT
FOR SALE OF GOODS
• Conditions:
The Seller has the right to sell the goods.
Must have Title to the goods
• Warranties:
1. The Buyer must have and enjoy quiet
possession of the goods – seller liable for
damages if disturbed
2. The goods are free from any charge or
encumbrance in favour of a 3rd Party
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