COMMERCIAL LAW

THE NATURE OF GOODS AND THE CONTRACT FOR THE SALE OF GOODS BY SIRHOLY GIMPA BUSINESS SCHOOL

ROAD MAP SECTION 1 INTRODUCTION TO THE SALE OF GOODS SECTION 2 THE NATURE OF A CONTRACT FOR TH SALE OF GOODS SECTION 3 SALE OF GOODS DISTINGUISHED FROM OTHER TYPES OF EXCHANGE SECTION 4 FORMATION OF CONTRACT FOR THE SALE OF GOODS SECTION 5 DIFFERENT TYPES OF GOODS UNDER THE SALE OF GOODS ACT SECTION 6 PRICE OF GOODS

INTRODUCTION TO THE SALE OF GOODS THE LAW OF CONTRACT AND THE SALE OF GOODS ACT The contract for the sale of goods is a particular type of contract which is different from other types of contract. A transfer of property in goods is a necessary element in the contract for the sale of goods.

The transfer of property means that ownership in goods must pass from the seller to the buyer to complete a contract for the sale of goods. If property, or ownership in the goods has not passed the sale is not complete.

INTRODUCTION TO THE SALE OF GOODS Section 1 (1) of the Sale of Goods Act, 1962, Act 137 posits that a contract for the sale of goods is a “contract whereby the seller agrees to transfer the property in the goods to the buyer for a consideration called the price, consisting wholly or partly of money.

THE SALE OF GOODS ACT On achieving independence, Ghana had to enact its own law on the sale of goods. The Sale of Goods Act 1962, Act 137 was enacted and before this enactment, the British Sale of Goods Act govern transactions on the sale of goods.

Section 80 of the Act postulates that “the rules of the common law and of customary law, save in so far as they are in consistent with the provisions with this Act, shall continue to apply to contracts for the sale of goods”. P 107 cont.

NATURE OF GOODS AND THE CONTRACT FOR THE SALE OF GOODS What are goods? The Sale of Goods Act posits that ‘goods means movable property of every description, and includes growing crops or plants and other things attached to or forming part of the land which are agreed to be severed before sale by or under the contract of sale’.

What are goods? Goods are things that can be moved from one place or position to another. It includes all chattels personal other than in action and money. Chattel real are things attached to or forming part of land.

Chattel personal are subdivided into things in possession and things in action. A thing in action is intangible and cannot be possessed. A thing in possession or a chose in possession is something capable of being possessed.

What are goods? Excluded from the definition of ‘goods’ is land and anything forming part or attached to land. Land (building) is classified as immovable property.

In Halaby v Wiredu (1973), Koranteng-Addo J In Halaby v Wiredu (1973), Koranteng-Addo J. said, “The sale of a business is a sale of more than the goods that are sold by the business man. It includes for instance the sale of goodwill and the sale of a whole business organization… what was sold consisted also of an interest in land. The sale of such things cannot surely be the sale of goods”.

NATURE OF CONTRACT FOR THE SALE OF GOODS A contract of sale is about the delivery of chattels. It includes a sale and an agreement to sell. Sale Where under a contract of sale the property in the goods is transferred from the seller to the buyer the contract is called a sale.

Agreement to sell Where under the contract of sale the transfer of the property in the goods is to take place at a future time or subject to some condition later to be fulfilled the contract is said called an agreement to sell.

NATURE OF CONTRACT FOR THE SALE OF GOODS Section 1 (1) of the Sale of Goods Act, 1962, Act 137 posits that a contract for the sale of goods is a “contract whereby the seller agrees to transfer the property in the goods to the buyer for a consideration called the price, consisting wholly or partly of money.

Section 81 (10) defines property as the general property in the goods and not merely a special property.

SECTION 3:SALE OF GOODS DISTINGUISHED FROM OTHER TYPES OF EXCHANGE Contract for works and materials These are contracts in which persons are contracted to do some work and they need to purchase some materials that are essential for the work to be done. It is the contract of work and materials because the contract is to do some work. Such contracts are not contracts for the sale of goods. Robinson v Graves (1935)

SECTION 3:SALE OF GOODS DISTINGUISHED FROM OTHER TYPES OF EXCHANGE A contract of hire If you hire something you pay money to the owner so that you can use it for a period of time. Since the thing you requested for and used would have to be returned, property does not pass to you. A contract of hire is therefore not a contract for the sale of goods. Beecham foods Ltd. v North Supplies (Edmonton) Ltd. (1959)

SECTION 3:SALE OF GOODS DISTINGUISHED FROM OTHER TYPES OF EXCHANGE Hire-purchase contract The Sale of Goods Act states that, ‘hire-purchase contract means a contract of sale of goods in which the price is to be paid for in five or more installments. A hire-purchase agreement therefore occurs when the buyer obtains possession of the goods, and pay for the goods in five or more installments.

SECTION 3:SALE OF GOODS DISTINGUISHED FROM OTHER TYPES OF EXCHANGE Barter Barter is the practice of exchanging goods for goods or services. The goods are not sold for money. Money consideration is very important for the contract for the sale of goods as stated in section 1 (1) of the Sale of Goods Act, 1962.

SECTION 3:SALE OF GOODS DISTINGUISHED FROM OTHER TYPES OF EXCHANGE Types of contracts involving the sale of goods Section 1 (3) of Act 137 postulates that there may be a contract of sale between one part owner and another. Section 1 (4) of Act 137 provides that a contract of sale may be absolute or conditional.

SECTION 4: FORMATION OF CONTRACT FOR THE SALE OF GOODS Form of the contract Section 3 of the Sale of Goods Act, 1962 provides that a contract for the sale of goods can be: In writing; By word of mouth; Partly by writing and partly by word of mouth; Implied by the conduct of the parties.

SECTION 4: FORMATION OF CONTRACT FOR THE SALE OF GOODS Elements of the contract of sale Offer and acceptance Capacity of the parties Consideration Intention to create legal relations Reality of consent Legality of object

SECTION 4: FORMATION OF CONTRACT FOR THE SALE OF GOODS Capacity Section 2 (1) posits that capacity relates to capacity to contract and to transfer and acquire property. P 120-121. Auction sales Subject to reserve price

SECTION 5: DIFFERENT TYPES OF GOODS UNDER THE SALE OF GOODS ACT Specific goods These are goods that are in existence, able to be identified and agreed upon at the time the contract is made being the goods that are the subject of a contract.

SECTION 5: DIFFERENT TYPES OF GOODS UNDER THE SALE OF GOODS ACT Unascertained goods These are the goods that are not identified at the date of formation of the contract and may or may not be future goods. These goods are sold under description that does not identify particular goods at the time when the contract is made. 20 bags out of a lot of 40 bags of groundnut. Until the 20 bags are identified the they remain unascertained. The parties have not identify them yet.

SECTION 5: DIFFERENT TYPES OF GOODS UNDER THE SALE OF GOODS ACT Ascertained goods Section 81 of the Act 137 provides that, ‘ascertained goods are goods identified and agreed upon after a contract of sale is made. Property in goods cannot pass if the goods are unascertained. The goods must become ascertained before property or ownership can pass.

SECTION 5: DIFFERENT TYPES OF GOODS UNDER THE SALE OF GOODS ACT Existing goods These are goods that are physically in existence and owned by the seller . They are goods that exist at the time of formation of the contract. Existing goods can either be owned or possessed by the seller at the time the contract of sale is made.

SECTION 5: DIFFERENT TYPES OF GOODS UNDER THE SALE OF GOODS ACT Future goods Section 5 (2) posits that future goods are goods to be manufactured or grown or acquired by the seller after making the contract. The are future goods when they are not yet owned by the seller, or when they are not yet in existence.

SECTION 5: DIFFERENT TYPES OF GOODS UNDER THE SALE OF GOODS ACT Contingent goods Section 5 (3) postulates that these are goods the acquisition of which depends upon a contingency which may or may not happen. The sale will take place on or after something has happened.

SECTION 6: PRICE OF GOODS What constitutes the price? Section 1 (1) of the Sale of Goods Act, 1962, Act 137 posits that a contract for the sale of goods is a “contract whereby the seller agrees to transfer the property in the goods to the buyer for a consideration called the price, consisting wholly or partly of money.

SECTION 6: PRICE OF GOODS How is the price determined? Section 6 (1): fixed by the contract or left to be fixed in a manner thereby agreed, or may be determined by the course of dealing between the parties. Section 6 (2): by paying a reasonable price.

SECTION 6: PRICE OF GOODS Four methods of determining the price of goods? By the parties by stating explicitly the price, by negotiation or bargaining; By Providing a mechanism for fixing the price; By a Course of dealing or by custom or trade practices By paying a reasonable price

SECTION 6: PRICE OF GOODS Valuation of price A valuation is a judgment that someone make about how much money something is worth. And it is done by a third party. Two parties can agree that a third party should value the goods. If the third party does not make such a valuation, the agreement is avoided. And where one party prevents the third party from making the valuation, the other party can maintain an action in damages against the defaulting party.

Thank you