Week 9: Chapters 21, 27 Flashcards
Definition of sale of goods under the act:
A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer goods to the buyer for money
Sale vs Agreement to sell
Sale - immediate
Agreement to sell - in the future, goods may not exist/be available
Sale of Goods Act Criteria: For Goods
The agreement must be for goods distinct from land or anything attached to land
Item must be tangible - not for financial instruments
Not for wages or labour
Sale of Goods Act Criteria: Goods for money
To be under the act the goods must be transferred for monetary consideration
Excludes barter or consignment transactions
Sale of Goods Act Criteria: In Writing
No particular form is required
Contracts over $50 must be evidenced by a written memorandum, signed by the party to be charged
Sale of Goods Act Criteria: In writing - how to avoid putting it in writing
Parties can avoid putting the agreement in writing if at least one of the following occur:
i. Buyer accepts part of the goods sold
ii. Buyer makes part payment of contract price
iii. Buyer gives something in earnest (deposit) to bind the contract
Sale of Goods Act Criteria: Transfer of title
There must be transfer of legal ownership/title of property to the buyer
Ownership usually goes with possession, but not always
Parties can give up possession and retain ownership
Title may pass at a different time than the transfer of possession
If title has not passed, risk of loss born by the seller
Transfer of Title Rule #1 (Unconditional contract for sale of goods already in deliverable state)
If there is an unconditional contract for the sale of specific goods in a deliverable state then the title passes when the contract is made, and time of delivery and payment are irrelevant
Transfer of Title Rule #2 (need to put specific goods in deliverable state)
Where the sale of specific goods requires something to be done to put in a deliverable state, then the title doesn’t pass until the thing is done and the buyer is notified
Transfer of Title Rule #3 (requirement to measure specific goods for sale)
In a contract for the sale of specific goods that requires the seller to do something (measure, weigh, etc.) to determine the price then the title does not pass until the thing is done and the buyer is notified
Seller must be obligated to do the thing required
Transfer of Title Rule #4 (goods delivered on approval)
When goods are delivered to the buyer on approval (option to return) the title transfer to the buyer when the buyer signifies acceptance or retains the goods without notice of rejection at the expiry of the specified time for approval.
Transfer of Title Rule #5 (contract for unascertained goods)
The title transfers when the goods in a deliverable state are unconditionally appropriated to the contract with the buyer.
In pursuance of contract, seller delivers goods to buyer or carrier for the purpose of transmission to buyer, and does not reserve right of disposal
Contractual Duties of the Seller under SGA
The SGA allows parties to include and terms and conditions they wish and the seller must adhere to them
Condition + what happens when breached:
A term of contract that is essential/to the root of it
breach of a condition the other party to treat breach as discharge, meaning the innocent party is released from further performance
Warranty + what happens when breached
A minor term in the contract
breach only entitles wronged party to sue for damages
The SGA determines whether terms are conditions or warranties
Condition of Title under the SGA
An implied condition in the sale of goods that the seller has the right to sell the goods
Seller must have the right to sell at the time the title needs to be transferred
Warranty of Title under the SGA
There’s a warranty that goods are free from encumbrance, unless seller has informed buyer of charge or encumbrance
Warranty for buyer to take “quiet possession”
- means no future claims to title by others
Condition for when goods are sold by description
When goods are sold by description, there is a condition that they actually correspond to the description, if not, the buyer can reject
Condition for when goods are sold by sample
Where goods are sold by sample alone there is a condition that the bulk of the goods will match the sample quality
Also a condition that they are free from any defect that would render them unmerchantable
- Applies unless the defect is such that inspection would reveal it and the buyer fails to notice
James Drummond & Sons v E.H. Van Ingen:
The buyer conducted a reasonable inspection but couldn’t detect a defect
The goods had a hidden defect that rendered them unmerchantable
Inspections are to be conducted with the care and due diligence of what someone with ordinary merchant knowledge would have
