SCHOOL OF LAW

BACHELOR OF LAWS
LLB3102 LAW OF SALE OF GOODS AND SUPPLY OF SERVICES

DEFINITION, FORMATION OF CONTRACT OF SALE AND COMPARISON WITH

OTHER CONTRACTS
INTRODUCTION

The law of Sale of goods comprises of several areas among which is a contract of sales of goods.
It is the initial step upon which the entire law of sale of goods is premised. To understand what a
contract of sale of goods is we shall look at what a contract is starting with one sale and later on
the others like hire purchase, agency etc., its formation and how it differs from other contracts.

DEFINITION OF A CONTRACT OF SALE OF GOODS OR SUPPLY OF SERVICES

In an attempt to define what a contract of sale of goods is, recourse is had to the key words
within the statement i.e. “contract”, “sale” and “goods.” Each of these words carries a literal and
legal meaning as discussed below. Literally, a contract is a legally binding agreement between
two parties. It’s either a contract of sale, or hire purchase name it depending on the nature of the
transactions as we shall later on see.

On the other hand, a sale is the exchange of a commodity for money or the action of selling
something. Lastly a good is an inherently useful and relatively scarce tangible item e.g. article,
commodity, material, merchandise, supply, wares etc. Thus, a contract of sale of goods is a
legally binding agreement to exchange a commodity for money.

Legally, a contract is defined under S.2 CA, 2010 which provides that a contract means an
agreement enforceable by law as defined in section 10. S. 10 (1) & (2) thereof stipulates that a
contract is an agreement made with the free consent of parties with capacity to contract, for a
lawful consideration and with a lawful object, with the intention to be legally bound. It may be
oral or written or partly oral and partly written or may be implied from the conduct of the parties.

Therefore, a contract is an oral or written, legally binding agreement between free consenting
parties with capacity to contract for a consideration.

Our concern today is the contract of sale of goods. A contract of sale includes an agreement to
sell as well as a sale as in S. 1 (1) SGSSA 2017. Further at S. 1 (1) SGSSA 2017 a sale
includes a bargain and sale as well as a sale and delivery.

Thus, a sale is a bargain (agreement) to exchange a commodity for money.

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Goods were defined by listing approach in S. 1 (1) SGSSA 2017 to includes all chattels
personal, other than things in action and money, and all emblements, industrial 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.

Hence, goods include all tangible items, articles, commodities, chattels or removable fixtures etc.

A contract of sale of goods is a contract by which the seller transfers or agrees to transfer the
property in goods to the buyer for a money consideration, called the price under S. 2 (1)
SGSSA 2017. Subsection (4) & (5) thereof distinguishes between a sale and an agreement to
sell. The former is where under a contract of sale the property in the goods is transferred from
the seller to the buyer while the latter is where the transfer of the property in the goods is to
take place at a future time or subject to some condition to be fulfilled later.

The following are the different types of Goods, Specific goods, Ascertained goods, Future
goods, Existing goods and Unascertained goods. MUST READ SECTION FOR THE
DEFINITION OF EACH

Contract of supply of services is a contract where person agrees to carry out a service whether
goods are transferred or are to be transferred; or bailed or are to be bailed by way of hire, under
the contract, regardless of the nature of the consideration for which the service is to be carried
out. S. 3 SGSSA 2017

Therefore, a contract of sale of goods is where a seller transfers or agrees to transfer the property
in goods to a buyer for a money consideration. Whereas a contract of supply of services is a
contract where person agrees to carry out a service whether goods are transferred or are to be
transferred or bailed or are to be bailed by way of hire, under the contract, regardless of the
nature of the consideration for which the service is to be carried out.

FORMATION OF CONTRACT OF SALE OR SUPPLY OF SERVICES

The ordinary principles of the law of contract apply i.e. elements of a valid contract namely;
offer, acceptance, intention to create legal relations, capacity to contract and consideration
details of which you covered under the law of contract.

A person with a sound mind and of 18 (eighteen) years of age and above has capacity to
contract i.e. a minor, person of unsound mind or person under influence of an intoxicant
cannot contract except for necessaries. See S. 11 C.A 2010
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Under S. 4 SGSSA 2017 capacity to buy and sell is regulated by the general law concerning
capacity to contract and to transfer and acquire property; but where necessaries are sold and
delivered to an infant or minor, or to a person who by reason of mental incapacity or
drunkenness is incompetent to contract, he or she must pay a reasonable price for the
necessaries (goods suitable to the condition in life).

S.5 SGSSA 2017 provides that a contract of sale may be made in writing (either with or
without seal) or by word of mouth, or partly in writing and partly by word of mouth, or in the
form of a data message, or may be implied from the conduct of the parties.
The subject matter of the contract i.e. the goods may be existing goods to mean in the hands of
the seller or future goods to mean that have to be appropriated to the contract. S. 6 (1) SGSSA
2017 the goods which form the subject of a contract of sale may be either existing goods,
owned or possessed by the seller, or goods to be manufactured or acquired by the seller after
the making of the contract of sale called future goods.

S. 6 (3) SGSSA 2017 Where the seller in a contract of sale of goods or supplier in a contract
for the supply of services purports to effect a present sale of future goods or to supply future
services, the contract operates as an agreement to sell the goods or supply of services.

It is important to highlight that consideration under the contracts of sale of goods is only
monetary. It is called price, it may be fixed, determined in the course of dealings in absence of
which a reasonable price shall be considered. S. 2 (1) SGSSA 2017 stipulates that contract of
sale of goods is a contract by which the seller transfers or agrees to transfer the property in goods
to the buyer for a money consideration, called the price.

Under S. 9 SGSSA 2017 the price in a contract of sale may be fixed by the contract, fixed in
the manner agreed in the contract, determined by the course of dealing between the parties or
consider a reasonable price.

Therefore, the formation of a contract of sale of goods is governed by the ordinary principles of
law of contract. Except that their consideration is only monetary.

COMPARISON WITH OTHER CONTRACTS

There are several transactions among which, is sale of goods but differs with the rest of them. A
contract of sale of good is distinguishable from other kinds of contracts that include the
following; contract of bailment, contract of hire purchase, contract of barter or exchange,
contract of supply of services, contract of a loan, contract of agency, a gift and licenses of
intellectual property i.e. sales of computer software. Whether a contract is one of sale, it depends
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on a number of reasons. It means therefore, the labeling a contract as a sale whereas not doesn’t
suffice. The SGSSA 2017 shall be applied strictly to only contracts of sale of goods not to the
rest of the contracts named.

a) Sale and bailment

A contract of bailment is a transaction under which goods are delivered by one party (the bailor)
to another (the bailee) on terms which normally require the bailee to hold the goods and
ultimately to redeliver them to the bailor or in accordance with his directions. See S. 3(1) HPA,
2009 on the definition of bailment. The property in the goods does not pass with delivery.

In the case of Chapman Bros v Verco Bros & Co Ltd (1933) 49 CLR 306 farmers delivered bags
of wheat to a company carrying on business as millers and wheat merchants. The terms of the
transaction required the company to buy and pay for the wheat on request by the farmer or
failing such a request, on a specified date, to return an equal quantity of wheat of the same type
but there was no obligation to return the identical bags. The issue was whether it was a contract
of sale or bailment. It was held that this transaction was necessarily one of sale as the property
passed to the company on delivery.

Therefore, if property is to pass at once it is a contract of sale and the reverse is true for bailment.
On the other hand goods delivered before property passes to that person is not a bailee but a
buyer in possession and a contract is of sale not bailment.

However, the distinction between a sale and bailment is subject to the principle Romalpa case
[1976] 1 WLR 676 the Romalpa clauses (Retention of title clause) in contract for the supply of
goods. It implies that a seller of goods to treat the goods as his property even after they have
been delivered, as security for the payment of the price. These are contracts of sale in which the
seller claims that the delivery of the goods is by way of bailment only. Even if the buyer uses the
goods for manufacturing process or reselling them, the original supplier has a charge on the
finished product or proceeds of sale. The complexity of the principle has now led to a conclusion
that bailment is to be limited to the actual goods delivered.

Borden (UK) Ltd v Scottish Timber Products Ltd [1981] Ch 25 the supplier delivered goods that
were used before effective payment in the manufacturing process. Court held that the contract
was of sale since the products was used up in the manufacturing process.

b) Sale and hire purchase

Under S. 3(1) HPA, 2009 hire purchase agreement is an agreement for the bailment of goods
under which the bailee may buy the goods or under which the property in the goods will or may
pass to the hirer.

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Matayo Musoke v Alibahai Garage Ltd (1960) EA 31 involved a hire purchase agreement
between the defendant and S of a car and handed him possession of the car and the registration
book. S had the car registered in his name, he defaulted on the payment and resold the car to a 3 rd
party (the plaintiff). The defendant seized the car and the plaintiff sued for recovery of the car or
its value. Bennett J dismissed the case and held that it was a hire purchase agreement not an
agreement to sell since S had not exercised the option to purchase by not payment any of the
installments. A motor-car registration book is not a document of title and delivery thereof does
not give to the person to whom it is delivered the means of appearing to be the owner or of
having apparent authority to sell the car.

In the case of Helby v Matthews [1895] AC 471 a piano owner lent to a hirer under hire purchase
agreement. The hirer sold it to a third party. It was held that a person in possession of goods
under a hire-purchase agreement had not ‘bought or agreed to buy’ them within the meaning of s.
25(2) (now s. 25(1)) of the Sale of Goods Act. This meant that the buyer, or the ‘hirer’ could not
dispose of the goods to a third party in contravention of the agreement, and the seller’s (or
‘owner’s’) security was thus fully protected.

Thus, a hire purchase contract is where goods are transferred to the hire purchaser and the owner
of goods retains property in goods to be transferred when the price is paid. It is not an agreement
to buy but a bailment because the owner remains with the property in goods and the hirer has an
option to buy.

c) Sale and barter or exchange

In a sale the seller transfers or agrees to transfer the property in goods to the buyer for a money
consideration, called the price. See S. 2 (1) SGSSA 2017 whereas in a barter it is exchange of
goods for goods.

Aldridge v Johnson (1857) 7 E & B 885 the issue was whether it was a contract of sale or barter.
The exchange was of 52 bullocks with 100 quarters of barley the difference of which was to be
paid in monetary terms. It was held that it was a contract of sale since money constituted a
greater part of the consideration. It would also look at the parties’ intention where they are equal.
If monetary consideration exceeds the other consideration in goods it is a sale and the reverse is
true.

Hence, whether a contract is a sale or exchange depends on either the intention of the parties or
the greater of the consideration between the goods and money. However, the proper distinction is
of the intention of the parties.

d) Sale and supply of services

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In a contract for supply of service the law applicable is the SGSSA 2017 even though some
goods might be incidentally supplied. A contract might be classified as a contract of sale of
goods or a contract for the supply of services depending on these distinctions. If goods are
supplied under the contract, the seller’s (or supplier’s) duties will normally be strict and
excludable only in the limited circumstances provided for contracts for sale or supply of goods
while insofar as the contract concerns services, the supplier’s duties will be duties of care.

Normally the supplier is strictly liable as regards the goods and only liable for negligence as
regards services. Except in cases in which goods were supplied as an incident to a contract for
services in which the seller’s or supplier’s duties were not strict, but only duties of care. On the
other hand, in those cases where the supplier’s duties as regards the services were held to be
strict and not just duties of care.

In the case of Perlmutter v Beth David Hospital 123 NE 2d 792 (1955) the plaintiff in blood
transfusion exercise bought blood which turned out to be defected and suffered injury hence
holding the defendants liable. The court held that the contract was of services, the supply of
blood was incidental to the supply of services.

However, in Dodd v Wilson [1946] 2 All ER 691 the plaintiff contracted with a veterinary
surgeon to inoculate his cattle with a serum. The surgeon used vaccine which he had himself
bought from suppliers of vaccine. It was held that this was not a contract of sale. The surgeon
was liable, although he was not himself guilty of any negligence because he impliedly warranted
the vaccine to be fit for the purpose for which it was supplied.

Therefore, a contract of sale imputes the duties in the SGSSA 2017 into the contract i.e. strict
liability where the seller is liable for defect in goods even in absence of negligence. While on the
other hand contracts for services the duties lie in care. Where the main part of the contract is the
supplier’s skill and labour, it is a contract of services whereas where it is passing property in
goods it is one of sale.

e) Sale and a gift

A gift is a transfer of property without any consideration and as such it is not binding except by
deed. But transactions in which a free gift is offered on the condition of entering into some other
transaction are complex.

In Esso Petroleum Ltd v Commissioners of Customs & Excise [1976] 1 All ER 11 garages
selling petrol advertised a ‘free’ gift of a coin (bearing a likeness of a footballer) to anyone
buying four gallons. It was held that, although the transaction was not a gift, inasmuch as the
garage was contractually bound to supply the coin to anyone buying four gallons of petrol, it was
not a sale of goods either. The transaction was characterized by Lord Simon and Lord
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Wilberforce as one in which the garage promised to supply a coin in consideration of a customer
buying the petrol. Thus, it was a collateral contract existing alongside the contract for the sale of
the petrol.

f) Sale and loan on security

A loan on security is designed to enable someone who already owns goods to borrow money on
the security of the goods. In transaction of this nature whether a sale or a loan, the courts have
always insisted that the substance of the transaction and not merely its form must be examined.

Kingsley v Sterling Industrial Securities Ltd, [1967] 2 QB 747, 780 Winn LJ said that the
question of whether in reality and upon a true analysis of the transactions and each of them, and
having regard in particular to the intention of the parties, they constituted loans or sales. It is
clear upon the authorities that if a transaction is in reality a loan of money intended to be secured
by, for example, a sale and hiring agreement, the document or documents embodying the
arrangement will be within the Bills of Sale Acts; it is equally clear that each case must be
determined according to the proper inference to be drawn from the facts and whatever the form
the transaction may take the court will decide according to its real substance.

Thus, whether a contract is a sale or a loan on security depends on the intention of the parties
embedded in the substance of the transaction rather than the form.

INCONCLUSION
Contract of sale of goods is where a seller transfers or agrees to transfer the property in goods to
a buyer for a money consideration. It differs from the other transactions and reserves the right to
the application of the SGSSA 2017.

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 TERMS OF A CONTRACT; CONDITIONS, WARRANTIES AND
REPRESENTATIONS
INTRODUCTION

Literally terms of a contract are contents of a contract also referred to as clauses. Legally, terms
of a contract are statements that describe the rights and obligation of each party to the agreement
or duties of parties to agreement. They are either express or implied and classified as conditions,
warranties or innominate terms. While statements made during the course of the negotiations can
be classified into express terms, representation, a collateral contract or sale puffs. This discussion
will focuses on the express and implied terms of a contract and the exclusion of the seller’s
liability.

TERMS OF A CONTRACT

The categories of terms of a contract are express or implied terms. Express terms are the
stipulations that are agreed upon by the parties and included in the contract at the will of the
parties. Whereas, implied terms are stipulations presumed to exist in the contract by operation of
law though not included in the contract i.e. by statute or courts e.g. implied terms under the
SGSSA 2017 or under case law. NB: Implied terms are duties imposed upon the seller by the
law.

A contract that is reduced into writing contains terms of a contract and statements excluded there
from are more likely to be representation. It is because during negotiations some statements
made may either be actual terms or representations. To distinguish between terms of a contract
and representations four factors are considered namely; relative knowledge, reliance, strength of
the statement, timing.

The express or implied terms are further classified into condition or warranties. A condition is a
fundamental term of a contract breach of which entitles the aggrieved party to repudiate the
contract. Whereas a warranty on the other hand is a minor term of a contract breach entitling the
aggrieved party to sue for damages.

Under the SGSSA 2017 s. 12 (2) provides that in a contract of sale or supply of services, a
condition is a stipulation breach of which may give rise to a right to treat the contract as
repudiated whereas a warranty is a stipulation the breach of which may give rise to a claim for
damages.

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However, whether a term is a condition or a warranty depends on the intention of the parties. It
follows therefore that parties to a contract of sale may choose to treat a breach of a condition as a
breach of warranty. The consequence of which entitles the other party to claim for damages
rather than repudiating the contract. Thus, it is immaterial what is called.

S. 12(1) and (3) SGSSA 2017 respectively stipulate that the buyer may waive the condition or
may elect to treat the breach of the condition as a breach of warranty and not as a ground for
treating the contract as repudiated. A stipulation may be a condition, though called a warranty in
the contract.

The terms of a contract implied by law can be varied by the parties thereto by express agreement,
course of dealing or usage.

The SGSSA 2017 under S.67 states that any right, duty or liability that would arise under a
contract of sale or supply of services by implication of law may be negatived or varied by
express agreement or by the course of dealing between the parties, or by usage that bind both
parties to the contract.

Express terms vary depending on the agreement of the parties but some of the frequently features
in a contract of sale of goods include the following; title, parties, recitals, terms and conditions
i.e. price, payment, delivery, non-delivery, inspection or shortage, cancelation, alteration or
modification, return of goods, warranty, risk and retention of title, assignment, defective goods,
limitation of liability, communications, force majeure, waiver, third party rights, entire
agreement, legal fees, governing law and jurisdiction and dispute resolution among others.

IMPLIED WARRANTIES

The implied warranties under the SGSSA 2017 include the following; warrant of quiet
possession and warrant of freedom from encumbrance details of which are covered below.

Warrant of quiet possession

The term “quiet possession” means the right to own or use goods without any one causing you
any difficulties. It comes from two words quiet which stands for free from disturbance and
possession to mean ownership or control. Altogether quiet possession is ownership without
inference. It is similar to the condition as to title which shall be seen later on. Interference can be
at any time, by law, or the seller and the quantum of the damages is the value of the goods.

S. 13(2)(b) SGSSA 2017 stipulates that in a contract of sale of goods there is an implied warranty
that the buyer will enjoy quiet possession of the goods except so far as the disturbance had been
disclosed or made known to the buyer.
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It implies therefore that if a buyer’s ownership of the goods is disturbed, he or she is entitled to
sue for damages.

In the case of Niblet v Confectioners’ Material (1921) 3 KB 387 CA the court held that there
was no quiet possession of the goods because prior to actual possession thereof the defendant
was required to strip of the label from which he incurred losses.

See: Rowland v Divall (1923) 2 KB 500

Warrant of freedom from encumbrances

An encumbrance is an interest, right, burden or liability attached to the goods so to say. The
interest, right, burden or liability is of a third party. Thus, the goods sold must have no claim of
interest, right, burden or liability by any person.

S. 13(4) SGSSA 2017 provides that the goods shall be free from any charge or encumbrance in
favour of any third party, not declared or known to the buyer before or at the time when the
contract is made is an implied warranty in a contract of sale.

IMPLIED CONDITIONS

The implied conditions by the SGSSA 2017 briefly are; condition as to title, condition in sale by
description, condition in sale by sample, condition where sale is by both sample and description,
implied condition as to fitness for purpose and condition as to merchantability.

Condition as to title
Title is right of ownership of a property. In a contract of sale a seller must have the right to sell at
the time of the contract while in agreement to sale the right to sell is at such a time when
property is to pass i.e. the power to sale and transfer property in goods or ownership in the goods
and ability to uphold the validity of the contract. A defective title entitles the buyer to repudiate
the contract due to total failure of consideration and recovers the full purchase price.

S. 13(1) SGSSA 2017 states that there is an implied condition on the part of the seller that in a
sale he or she has a right to sell the goods whereas an agreement to sell he or she will have a
right to sell the goods at such a time when the property is to pass.

Niblet v Confectioners’ Material above; the plaintiff bought 3000 tins of preserved milk from
the defendant. That 1000 of which infringed a trademark in England and the customs authority
ordered their unlabeling. They were sold at a loss. The court held that the defendant was liable

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for breach of the condition as title. The infringement of another company’s trademark entitles it
to obtain injunction restraining sell of goods. Thus, the defendant would have no right to sell.

In the case of Rowland v Divall (1923) 2 KB 500 the seller sold a car to a buyer a stolen car
before it came to the latter’s possession. The original owner of the car recovered it from the
buyer after 4 (four) months. Court held that there was total failure of consideration because the
seller had no title thus the full purchase price was recoverable despite of its use for 4 (four)
months.

etc. The strict duty extends to the seller because the buyer relies on the former’s skill and
knowledge. The buyer has a right to reject the goods after examination if the deviation from the
description could not be discovered by ordinary and natural examination. However, the strict
duty of description is subject to the demini mis rule. The court gives a flexible interpretation to
the meaning of the words. The words must be stated as a fact not as seller’s opinion.

S. 14(1) SGSSA 2017 states that in a contract for the sale of goods by description, there is an
implied condition that the goods shall correspond with the description.

There is an implied condition in a contract of sale that the goods must match the contract
description failure of which entitles the buyer to reject the goods.

Bowes v Shand (1877) 2 AC 455 involved the contract of sale of 300 tons of Madras rice to be
shipped to Madras in March & April. The rice was shipped in February and the buyer rejected it.
The court held that the buyer was not bound to take it (the shipment) since the bargain was for
madras rice shipped in March and April.

Although it is implied in law that goods must match their description is strict, the courts of law
do not pay attention to the small details.

In the case of Arcos v Ranaason [1933] AC 470 a seller was required to supply half an inch
staves but delivered staves of a thickness more than half an inch. The issue is whether the buyer
could reject the goods. Court held that if a written contract stipulates a condition as to
measurement, weight etc. they must be complied with. A condition of a contract must be
performed if not buyer was a right to reject the goods.

However, the law does not pay attention to deviations from the contract descriptions that are
microscopic. The principle is “Demini mis non curat lex” which means that “the law pays no
attention to trifles”. The court might hold that the damage is so insignificant and the difference
above or below the described amount or quality is very small. That it is a technical breach
because the law does not attend to trivialities thus, nominal or no damage may be awarded.
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Furthermore, the court does not attach rigid meaning to the descriptive words but rather flexible
interpretation. A word or things desc riptive must have been relied upon it. Non-influential trade
puffs and advertisement statement do not count. The descriptive words must be stated as a fact
not as a seller’s opinion.

Harlington & Leister Enterprise Ltd v Christopher Hull Fine Art Ltd [1991] 1 QB 564 in a sale
the sellers offered 2 (two) paintings they described as being by Gabriel Munter. They later were
found the paintings to be a forgery, the buyer brought an action claiming failure to correspond
with the description. It was held that for the sale by description, the description must be
influential in the sale as to become an essential term. The painting being by Gabriel Munter was
not influential in the sale since it was not intended to become a contract term by the parties.

Condition is sale by sample

The goods are required to conform to the agreed sample and exhibited before the sale. A sale to
be by sample there has to be a term in the contract, express or implied agreement to that effect as
in S. 17(1) SGSSA 2017.

A contract for sale by sample implies that the bulk must correspond with the sample in quantity.
The buyer must have a reasonable opportunity of comparing the bulk with the sample. Lastly, the
goods shall be free from any defect, rendering them unsatisfactory, which would not be apparent
on reasonable examination of the sample. See: S. 17(2) SGSSA 2017 However, particular terms
of contract can exclude the implied condition of buyer being awarded reasonable opportunity to
examine the goods.

The correspondence depends on the parties understanding and trade usages. A seller is not liable
for apparent defects on reasonable examination. However, for latent defects detectable by an
ordinary examination a buyer can reject the goods though the prima facie correspond with the
sample.

In Drummond & Sons v Van Ingen & Co. (1887) 12 AC 284 there was a sale of mixed coating
by sample that corresponded with the sample but had latent defects in the cloth. The coat made
out of it were un saleable the same defect existed in the sample but undetectable by reasonable
examination thus entitling the buyer to reject the cloth.

S. 42(1) SGSSA 2017 provides that a buyer is not deemed to have accepted goods until he or she
has had a reasonable opportunity of examining them for the purpose of ascertaining whether they
are in conformity with the contract.

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Condition where sale is by both sample and description
Correspondence with sample means that the bulk must match with the sample in quality and
condition revealable by ordinary inspection. The kind of examination to be used to detect defects
will depend on the trade custom. Upon such examination non correspondence will amount to
breach of condition if visual / chemical must correspond by that.

It is therefore immaterial whether they (the goods) can be made to correspond with sample at a
little cost and less time. The parties to the contract can agree that goods must correspond with
both the sample and the analysis. It is not enough that the goods correspond with visual
examination. The seller is liable if goods are examined and do not to correspond with the sample
in the stated period subject to the custom or trade usages.

S. 14(2) SGSSA 2017 states that in a contract for the sale of goods by description, there is an
implied condition that the goods shall correspond with the description and if the sale is by
sample, as well as by description, it is not sufficient that the bulk of the goods corresponds with
the sample if the goods do not also correspond with the description.

In the case of Steel Busks Ltd v Bleecker BlK & Co. Ltd [1956] 1 Lloyds Rep 228 there was a
sale of rubber by sample and description. Upon delivery, when the rubber used left stains on the
material which was not the case for the sample. The buyer rejected the goods after chemical
analysis that it contained a substance that was absent in the sample. The court held that the
sample corresponded with the bulk in quality by visual examination as the usual trade practice.

However, the non-correspondence with sample is subject to the demin mis rule. This principle
was looked at above.

Joe Lowe Food Products Co. Ltd v J.A & P Holland Ltd [1954] 2 Lloyds Rep 70 there was a
sale by sample of 100 tons of dessert powder but on delivery the load was found to have hard
lumps. The buyer rejected the whole consignment. It was held by Devlin J, that although there
were hard lumps in the mixture, they were so slight to take it out of the demin mis rule in order
to entitle the buyer to reject the whole consignment.

Condition as to fitness for purpose

Goods are supplied for various purposes. The buyer must expressly make known to the seller the
specific purpose for which he needs the goods. However, for good used for only one particular
purpose or where its purpose is ascertainable from its nature the law implies the seller knows
even without the buyer stating so expressly.

A seller is not liable where the buyer did not rely on the seller’s skill and judgment. On the other
hand the seller is liable if is a dealer in goods of that description. Therefore, a seller is liable if
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the goods are not fit for purpose except if sold under a patent or trade name. However, a buyer
by his conduct may waive the breach of this condition by continuing to use the good with its
known defects.

S. 15(1) SGSSA 2017 Subject to this Act or any other law, there is no implied warranty or
condition as to the quality or fitness for any particular purpose of goods supplied under a contract
of sale.

S. 15(2) SGSSA 2017 states that the implied warranty or condition as to the quality or fitness for
any particular purpose of goods exists if;
a) the seller sells goods of a description which it is in the course of the seller’s business to
supply; and
(b) the buyer expressly or by implication makes known to the seller the particular purpose for
which the goods are required so as to show that the buyer relies on the skill or judgement of the
seller, whether the seller is the manufacturer or not, unless the circumstances show that the buyer
in fact does not rely, or that it is unreasonable for the buyer to rely on the seller’s skill and
judgement.

In Re Andrew Yule & Co. AIR 1932 Cal 879 the buyer order for Hessian cloth generally used
for packing purposes but did not disclose his purpose for it. The delivery was unsuitable for
packaging food products because of the usual smell. Court held that the buyer had no right to
reject the cloth since it was generally for packing purpose. The seller could be liable for breach
of implied condition as to fitness if the buyer had disclosed to the seller the purpose of the cloth.

S. 16 SGSSA 2017 states that where materials are used under a contract for the supply of
services, there is an implied term that the materials will be sound and reasonably fit for the
purpose for which they are required.

S. 15(7) SGSSA 2017 a seller must be one who deals in goods of that description to have dealt in
those particular goods consistently. An implied warranty or condition as to quality or fitness for a
particular purpose may be annexed by the usage of trade.

In Ashington Piggeries v Christopher Hill Ltd (1972) AC 441 it was a contract of sale of herring
meal. It contained a harmful substance unsuitable to feed mink for which it was required but not
most animals. Court held that the seller was liable because the purpose goods were required was
made known to him. Every statement as to fitness made by a buyer is treated as description
which the buyer relied on. If the only purpose, it must be usual and ordinary as if specified must
be of a usual nature. Further, manufacturers liable for breach of an implied condition because
the supply of those particular goods was in their course of business.

14
A buyer by his conduct may waive breach of this condition by continuing to use the good with its
known defects.

In Norman v Overseas Motor Transport Ltd (1959) E.A 131 the applicant ordered for a car
model in England under written agreement. That indicated that the seller’s liability ended when
the car reached in a road worthy situation. On delivery of the car it had continuous defects that
went on being correct as the applicant drove it. When they persisted the applicant returned the
car and demanded for a purchase price and damages for inconvenience.

Court held that the applicant had treated breach of a condition as breach of warranty when he
continued to use the car. When the defects were corrected he could not rely on the defects to
repudiate the contract. Further, the defects could not have occurred if the modifications were
carried out. Thus, applicant could not reject the contract for not being fit for purpose.

Condition as to merchantability
Merchantability includes description of the goods and price and quality requirements. An article
to be merchantable must have sale value and use value of normal purposes.
Doola singh & Sons v The Uganda Foundry & Machinery works 12 EACA 33 merchantable
was said to mean an article in such a quality and condition that a reasonable man acting
reasonably after full examination will accept it and offer to buy.

S. 15(2) SGSSA 2017 states that the implied warranty or condition as to the quality or fitness for
any particular purpose of goods exists if;
a) the seller sells goods of a description which it is in the course of the seller’s business to
supply; and
(b) the buyer expressly or by implication makes known to the seller the particular purpose for
which the goods are required so as to show that the buyer relies on the skill or judgement of the
seller, whether the seller is the manufacturer or not, unless the circumstances show that the buyer
in fact does not rely, or that it is unreasonable for the buyer to rely on the seller’s skill and
judgement.

Wren v Holt (1903)1 KB 668 the plaintiff’s health detoriated due to the arsenic beer he drank
from the defendants tied beer house. Court held that if goods are bought by description for a
person who deals in goods of that description. There is an implied condition that goods must be
of merchantable quality. In this case the beer was bought by description and examination could
not reveal the defects. Thus, seller was liable for breach of an implied condition that the beer was
not of merchantable quality.

S. 15(7) SGSSA 2017 provides that an implied warranty or condition as to quality or fitness for a
particular purpose can be annexed to a trade usage. In a transaction of a particular trade, its trade
15
custom will be part of the contract. This condition is only for conditions relating to merchantable
quality and fitness for purpose.

Peter Darlington Partners Ltd v Gonsho Co. Ltd [1964] 1 Lloyd’s Rep 149 involved the sale of
coronary seeds. According to the trade custom they could not be rejected for having impurities.
But instead was entitled to a price for the proportionate of the impurities. Court held that the
contract was governed by that trade custom. The person seeking reliance on such custom should
prove its existence. Further it must reasonable, professional and acceptable.

EXCLUSION OF SELLER’S LIABILITY

A seller is liable for breach of an implied term but the law provides for an exclusion that negates
terms implied by law in the buyer’s favour. The court permits freedom of contract thus the terms
made by parties stand. The parties to a written agreement can rely on exclusion clauses though
not signed by the other party as long as he or she had reasonable notice.

But courts construe an exception clause against the parties relying on it in case of ambiguity
because the seller is in better position to litigate. Courts interpret exclusion clauses strictly and
give precise legal meaning to technical terms. A seller cannot take advantage of the exclusion
clause to provide different goods.

S. 19 SGSSA 2017 provides that an express warranty or condition shall not replace a warranty or
condition implied by this Act.

Further s. 67 SGSSA 2017 stipulates that any right, duty or liability would arise under a contract
of sale by implication of law may be negatived or varied by express agreement or by the course
of dealing between the parties, or by usage.

In L’Estrange v F. Graucob Ltd (1934) 2 KB 394 it was a sale of a machine after signing an
order form. The buyer signed it but it included a term excluding all implied conditions,
warranties, statements statutory or other. After delivery, the machine did not work to
satisfactory. The claim was for the machine not being of fit for purpose. Court held that it was
immaterial that the buyer had not read the terms so he was bound by the terms of the contract.

Wallis, Sons & wells v Pratt and Haynes (1911) A.C 294 the respondents sold common English
semi form seeds in agreement with the applicant excluding all implied warranties express or
implied as to the description or others. After sale the applicant resold the seeds, the buyer
accepted the seeds. Parties to whom applicant sold sought for damages for mistake. Court held
that that the parties could not exclude a fundamental term that is non-excludable since the

16
applicants had accepted the seed they had treated a breach of a condition as a warrant and thus
entitled to remedies in that respect.

Karsales (Harrow) Ltd v Wallis (1956)1 WLR 936 a garage owner showed a 2nd hand car in
excellent condition sought to buy it. It was through a finance co. which signed on the forms with
an exclusion clause excluding all conditions / warranties implied as to age, fitness, or road
worthy. On delivery the car was in a very poor state and he refused to pay for it. It was held that
that the plaintiff could not rely on the exclusion clause because delivery of a car that could move
was a fundamental part of a contract. The lender had an implied obligation of delivery the car in
a condition the hirer saw it. The exception clause is there when the party is carrying out a
contract in its essential respect and not to cover his misconduct.

CONCLUSION
Terms of a contract are statements that describe the rights and obligation of each party to the
agreement. They are either express or implied and are classified as conditions, warranties or
innominate terms. Statements made during the course of the negotiations can be classified into
express terms, representation, a collateral contract or sale puffs. There are consequences for
breach of any of the terms i.e. damage or repudiation of the contract. However, party can choose
to exclude implied terms of the contract but not for the fundamental part of a contract.

17
 PASSING OF PROPERTY AND RISK

Literally, property is the exclusive right of possessing, enjoying and disposing of a thing. S.1
(1) SGSSA 2017 defines “property” to means the general property in goods, and not merely a
special property. Passing on the other hand comes from the word to “pass” meaning
movement or transit.
Thus, passing of property is the movement of exclusive right of possessing, enjoying and
disposing of a thing.

Risk on the other hand is a situation involving exposure to danger. It is also the potential
danger that threatens to harm or destroy an object, event or person.

The relevancy of passing of property in sale of goods

1. Determines who bears the risk

As a general rule risk passes with transfer of property in goods unless otherwise agreed
by the parties except in case of delays at the party in fault or as to duties or liabilities of a
bailee. See: s. 27 SGSSA 2017

2. The right to take action against third parties

The person with the property in goods at that time has the right to take action against a
third party.

3. Right to sue for the price

The buyer is under an obligation to pay the price of the goods. The seller may maintain
an action against the buyer for the price of the goods upon defaulted in payment. Where
the property in the goods has passed or, even when the property in the goods has not
passed and the goods have not been appropriated to the contract but where payment was
on a certain date, the seller can maintain an action for price of the goods. S. 60 SGSSA
2017

4. Insolvency

Insolvency is the condition of one who is unable to pay his debts as they fall due, or in
the usual course of trade and business.

18
In insolvency whether the official receiver takes over the goods depends on whether the
property in goods has passed with insolvent party. If property in goods passed to a buyer
but sellers becomes insolvent before delivery. The official receiver will claim on the
seller’s assets he has title. Where property has passed to the buyer but he becomes
insolvent before payment of price. The seller has a lien on the goods until the price is
paid pursuant to s. 52(1) (c) SGSSA 2017.

RULES GOVERNING TRANSFER OF PROPERTY

Passing of property depends on whether the nature of goods i.e. specific or future goods.
The former are goods identified and agreed upon at the time a contract of sale is made
whereas the latter are goods to be manufactured or acquired by the seller after the making
of the contract of sale. See: s. 1 (1) SGSSA 2017

Transfer of property in specific or ascertained goods

Property in specific or ascertained goods is transferred at the time intended by the parties.
The intention of the parties is imputed from the terms of the contract, conduct of the
parties or circumstances of the case. S. 25 SGSSA 2017

Bwiriza vs. Osapil [2003] 1 EA 30 it held that passing of property is modified by the
intention of the parties inferred from their conduct. In the instant case, defendant’s
retentions of original copy of log book, insurance certificate and road license indicated
his intention for property not to pass at the time of the execution of the sale agreement.

However, where the intention of the parties is not clear, then certain rules under the
SGSSA 2017 are applied to ascertain the intention of the parties subject to parties’
agreement. S. 26 SGSSA 2017

Where goods are in a deliverable state

Property in specific goods in deliverable state passes to the buyer at the time of execution
of the contract irrespective of postponement of time of payment and delivery. S. 26 (a)
SGSSA 2017

The term “deliverable state” means that a state which the buyer would under a contract be
bound to take them i.e. if the seller has to do something about the goods they are not in
deliverable state e.g. pack

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In the case of Underwood v Burgh Castle Brick (1922) 1 KB 343 it was held that
deliverable state is not completeness of the subject matter alone but also being in the
actual state at the date of the contract and state in which goods are delivered by terms and
conditions of the contract. If the owner agrees to sell, property in goods passes at the time
contract is made though delivery and payment are postponed.

Kursell v Timber Operator (1927) 1 KB 198 involved a sale of a required measurement

of timber, before a law was passed gazetting the forest and confiscating property. It was
held that the timber was not in deliverable state and the purchaser was not bound to take
delivery. Hence, property in goods had not passed thus the timber was not at the
purchaser’s risk.

When goods have to be put into deliverable state

In a sale of specific goods to which something has to be done to put the goods in
deliverable state property therein passes when that thing is done and the buyer notified. S.
26 (b) SGSSA 2017

Underwood v Burgh Castle Brick (supra) it was held that property had not passed at the
time the contract was made because something that had to be done to the engine to put it
in deliverable state had not been done.

Where something has to be done to ascertain the price

The property in goods of specific goods in deliverable state whose price is ascertainable
upon the seller weighing, measuring, testing or doing some act or thing does not pass
until it is done and the buyer notified. S. 26 (c) SGSSA 2017

The seller is under the obligation to do that thing or act. Where the seller puts goods in
deliverable state but price to be determined by a third party, the third party’s act will not
prevent property from passing because it’s the seller’s obligation.

In the case of Johana Mbugwe v Mwangi Muigwe (1949) 16 EACA 1 there was a
contract of sale of a lorry whose price had to be fixed by the controller. It was held that
property in the lorry had passed when the contract was made and the seller had nothing to
do to the lorry to ascertain the price. Further the price be read ejusden generis with the
seller is bound …. “Ejusden generis” means “of the same kind”

20
When goods are delivered on approval or “sale or return” or other similar terms

The property in goods delivered to the buyer on approval or “on sale or return” or other
similar terms, passes to the buyer when he or she signifies approval or acceptance to the
seller, does any other act adopting the transaction, retains the goods without giving notice
of rejection before expiration of fixed time and in absence of which is reasonable time. S.
26 (d) SGSSA 2017

“Sale or return” means that if the buyer wants the goods buys them or if not rejects them.

Kirkham v Attenboroguh (1897) 1 Q.B. 201 the plaintiff delivered jewelry to winter on
sale or return who pledged it to the defendant. In a claim of return of goods or its value it
was held that the action of winter was one owner of the goods and the plaintiff could only
sue for price in a delivery of sale or return, there has to be action of approval of
transaction or an act consistent with one’s being a purchaser.

However, an express stipulation that property does not pass until price is paid over rides
the rules.

Transfer of property in unascertained and future goods

Unascertained goods are those that are not separately identified or ascertained at contract
time, only understood by description. Future goods are goods to be manufactured or
acquired after the making of the contract. It is an agreement to sell and property in goods
passes when the goods are ascertained or appropriated to the contract.

In a contract for the sale of unascertained goods, no property in the goods is transferred to
the buyer until the goods are ascertained. S. 22 SGSSA 2017

Under S. 26 (e) SGSSA 2017 provides that in a contract for the sale of unascertained or
future goods by description the property therein passes to the buyer when goods of that
description are in deliverable state and appropriated to the contract by assent of the buyer
or the seller. Assent may be express or implied and may be given either before or after
the appropriation is made.

Ascertaining or appropriation involves identifying and determining the specific goods to

be delivered under the contract e.g. weighing, measuring, actual or constructive delivery
or agreement between the parties etc. An appropriating act is that last act to be done by
the seller and property doesn’t pass until that final act is done to the goods. E.g. delivery,
identifying and marking ready etc.
21
In the case of Carlos Federspiel SA v Charles Twigg [1957] 1 Lloyd's Rep 240 it was
held that goods to have been appropriated to the contract, the buyer and seller must have
had the intention of attaching the goods in question to the contract irrevocably. The mere
selection of the goods by the seller to be used in the performance of the contract is not
enough.

Unconditional appropriation depends on the circumstances of each case.

S. 26 (f) SGSSA 2017 stipulates that the seller’s delivery of goods to the buyer without
reserving the right of disposal is unconditional appropriation of the goods to the contract.

Conditional appropriation is where the buyer reserves some other rights other than
contractual right. They can be express or implied where the buyer will not have the goods
until payment. The property in goods doesn’t pass until then.

S. 28 (1) & (2) SGSSA 2017 the seller may, by the terms of the contract or appropriation,
reserve the right of disposal of the goods until certain conditions are fulfilled, the
property in the goods does not pass to the buyer until the conditions imposed by the seller
are fulfilled.

It validates the retention of title clause that the seller retains the title in goods until when
they have been paid for by the buyer i.e. the Romalpa clause

Armour and another v Thyssen Edelstahlwerke AG [1990] 3 All ER 481 it was held
that ownership stayed with the defendant because the Scottish company had not yet paid
for them and thus, the steel could be recoverable.

The seller has a right of disposal and buyer does not acquire property in goods until
actual delivery.

Re Shipton, Anderson and Harrison Brothers [1915] 3 KB 67 it was stated that

property in goods had not passed due to the right of disposal asserted by the seller that
was not bound to make delivery order until payment.

S. 28 (4) SGSSA 2017 stipulates that the seller of goods draws the bill of exchange and
bill of lading on the buyer for the price. If the latter does not honour the bill of exchange
and wrongfully retains the bill of lading, the property in the goods does not pass to him or
her.

22
Thirdly, for goods shipped by a bill of lading, the seller is deemed to reserve the right of
disposal. Although the bill of lading has names of the buyer, or goods have physically
been delivered to the buyer. The presumption lays on the intention of the seller to be paid
before property in goods passes.

S. 28 (3) SGSSA 2017 states that goods are shipped and by the bill of lading the goods
are deliverable to the order of the seller or his or her agent, the seller is prima facie
deemed to reserve the right of disposal.

E Clemens Horst Co v Biddell Brothers [1911] 1 K.B 214 it was held that where it is a
C.I.F contract property passed conditionally if the bill of lading was made in favour of
the seller and unconditionally if the bill of lading was made out in favour of the buyer.

23
 RISK AND FRUSTRATION

In case of frustration neither party is liable for any loss suffered. However, if goods are
detoriated at the seller’s risk, he or she is liable to the buyer for non-delivery. While if it is at the
buyer’s risk then he or she is liable to the seller for payment of purchase price.

A seller is exempted from liability under the doctrine of frustration. Although where part of the
goods have perished, the seller has to delivers the other part that is not perished thus not
frustrated. Frustration of unascertained goods depends on the nature of goods in question.

S. 8 SGSSA 2017 provides that in an agreement to sell specific goods, and subsequently the
goods, without any fault on the part of the seller or buyer, perish before the risk passes to the
buyer, the agreement is thereby avoided.

In the case of Barrow Lane v Phillips (1929) 1 KB 574 it was held that non-severable contracts
are frustrated by perishing of part of the goods while a severable contract is frustrated regarding
the perished part and not frustrated as to the other part thus contract performance must continue.

Thus, common law rules relating to frustration are applicable to contracts of sale of goods and
supply of services.

Furthermore, in Howell v Coupland (1876) 1 Q.B.D. 258 it was held that neither party is liable
for impossibility of performance of an agreement to sell of what would be a specific thing.

S. 27(1) SGSSA 2017 states that unless otherwise agreed, the goods remain at the seller’s risk
until the property in the goods is transferred to the buyer.

24
 TRANSFER OF TITLE BY A NON-OWNER (THE NEMO DAT RULE)

As a general rule, a seller cannot transfer to a buyer a better title than the seller has. The maxim
“nemo dat quod habet” meaning “no one gives who possesses not” A seller’s defective title also
affects the buyer. S. 29(1) SGSSA 2017 stipulates that goods sold by persons not owner or his or
her agent, the buyer acquires no better title than the seller had unless the owner is precluded from
denying the seller’s authority to sell.

In a sale where the seller had no property in goods the true owner can recover the goods from the
buyer. The rule protects true owners but has exceptions protecting commercial transactions.

In Bishopgate Motor Finance Corporation v Transport Brakes Ltd (1949)1 KB 322 Lord
Justice Denning held that in the development of our law, two principles have striven for mastery.
The first is for the protection of property: no one can give a better title than he himself possesses.
The second is for the protection of commercial transactions: the person who takes in good faith
and for without notice should get a better title. In cases where the person who sold the goods is
not the owner or has no such authority, the buyer does not get better title than the seller except
where the true owner is precluded from denying seller’s authority to sell that by his conduct.

Exceptions to the nemo dat rule

1. Estoppel
Estoppel arises where one party represents as fact what are not upon which the other party
believes as facts and acts. The buyer in such gets better title than the seller.

S. 29(1) SGSSA 2017 states that where goods are sold by a person who is not the owner of
the goods and who does not sell them under the authority or with the consent of the owner,
the buyer acquires no better title to the goods than the seller had, unless the owner of the
goods is by his or her conduct precluded from denying the seller’s authority to sell.

Types of estoppel

a) Estoppel by representation
It is where the true owner by his conduct, words or negligent omission represents to
the buyer that the purported seller is the true owner or has authority for him or her to
sell the goods. The representations must be of fact not opinion, clear and acted upon.

The nature of estoppel was given in Pickard v Sears (1837) 6 A & E 469 that where
one by his words or conduct causes another to believe in the existence of certain fact
and induces him to act on them will be precluded from altering his position.
25
 In Farquharson Bros v King & Co. [1902] AC 325 it was held that for estoppel to
arise the owner must have wrongfully represented to the buyer that the person who
sold to him had the authority to sell even if in fact he did not.

Estoppel by conduct is to be invoked when something misleading the affected party is

beyond mere allowing a non-owner to have possession of the goods.

b) Estoppel by negligence
Where the owner has negligently allowed a 3rd party to represent him as the owner or
having the owner’s authority to sell. Negligence must be proved that duty of care to
the owner of property that the property does not get lost or stolen.

Necessity of establishing a duty of care eliminates the doctrine of estoppel under void
contracts by mistake where owner is induced to part with the goods to a buyer.

In century Newbury car Auctions v Unity Finance [1957] 1 QB 371 it was held there
was no estoppel and the plaintiff were entitled to recover the car because the
registration book is not a document of title and contains a warning that the named
person may or may not be the owner.

2. Sale by agent
S. 32(2) SGSSA 2017 provides that where any person who bought goods and with
consent of the owner obtains possession of goods or documents of title any sale or
disposition by him is construed as expressly authorized to make sale by the seller.

Thus, a bonafide purchaser for value without notice from any agent whether authorized or
not acquires good title.

S. 32(3) SGSSA 2017 “agent” means a person having, in the ordinary course of his or her
business as such an agent, authority either to sell goods, or to consign goods for the
purposes of sale, or to buy goods, or to raise money on the security of goods.

Folkes v king [1923] 1 KB 282 it was held that the actions required refer to the consent
of the owner with reference to the possession of goods by the mercantile agent. In this
case a car was sold by the agent below the reserve price thereby all subsequent buyers
had good title and the plaintiff could not recover the car.

26
 Instances where the person claims to be in possession of the goods with the consent of the
owner which he obtained by trick or fraud. In Pearson v Rose & Young [1951] 1 K.B.
275 (CA) it was stated that the owner must consent to the agent having the goods for a
purpose connected to his business as a mercantile agent e.g. sale, display, offer.

In Oppenheimer v Frazer & Wyatt [1907] 2 K.B. 50 it was stated that a mercantile agent
is capable of stealing and if he does so or must be taken to hold possession of the goods
without consent of the owner.

Lowther v Harris [1972] 1 K.B. 275 (CA) it was held that consent is not vitiated by any
ground committed by the mercantile agent himself.

In the ordinary course of business

The mercantile agent must be in possession the goods for the purpose connected with the
business as a mercantile agent. The innocent purchaser seeking protection under the
exception must prove that mercantile agent acted in course of business.

It is considered whether the manner in which the sale or pledge was effect was with in the
ordinary course of such business.

Oppenheimer v Attenborough & Son [1908] 1 KB 221 it was held that it must be within
business hours, proper business place and in a proper way in which a mercantile agent
would act.

Mercantile agent must not be in possession of goods in any other capacity. In Astley
Industrial Trust v Miller 1968] 2 All ER 36 it was stated that B was not in possession of
the car as a mercantile agent therefore could not pass a good title.

3. Sale under special powers of sale

S. 29(2) (a) and (b) SGSSA 2017 provides that apparent owner of goods can dispose
them of as if there are true owners under special common law powers or execution of
court order of competent jurisdiction.
It further includes transactions by banks and other financial institutions auctioneers,
bailiffs acting under court orders or clear statutory provisions.

4. Sale under voidable title

S. 30 SGSSA 2017 stipulates that a seller with a voidable title which has been avoided at
the time of sale, a buyer thereof in good faith without notice of defect in title acquires
good title to goods. E.g. Goods acquired by fraudulent means, trick and buyer in good
27
 faith for value acquires good title and it’s for original owner to prove it were not in good
faith.

Lewis v Avert [1972] 1 QB 198 it was stated that where the contract was voidable as to
mistaken attribute to the buyer and because it was not allowed at the time of the sale to D
thereby acquired good title. For transactions to stand it must not have been avoided and
the time of the contract.

Car & Universal Finance Co. Ltd v Caldwell [1965] 1 QB 525 it was held that where the
first sale had been avoided the bonafide purchaser got no title to the car under this
section.

5. Sale by seller in possession

S. 32(1) SGSSA 2017 provides for a position of a seller who having sold the goods
remains in possession of them or documents of title then transfer the goods or documents
of title to a bonafide purchaser for value without notice of previous sale. Thus, the sale or
pledge will have the same effect as that with the express authority of owner of goods. The
buyer acquires good title but it must be proved that the seller disposed of goods or pledge
not in position of hirer or bailee.

Mitchell v Jones (1968) 272 N.C. 499 it was held that if a person sells goods and
continues in possession as though he had made a valid contract of sale provided he has
not delivered them may make a good title to a bonafide buyer.

The delivery or transfer by that person as in S. 32(1) there has to be in the physical
possession of goods. Worcester Works Finance Ltd v Cooden Engineering Co. Ltd
[1971] 1 WLR 1761 it was held that words in S. 25(1) SOGA Cap 82 disposition and
possession to mean physical possession irrespective of the quality of one’s possession.

The seller must be one remaining in possession of the goods even after sell. The section
does not apply if he loses possession even for the shortest period.

Pacific Motors Auctions Pty Ltd v Motor Credits (Hire Finance) Ltd [1965] AC 867 it
was stated that words continues in possession mean the continuity of physical possession
regardless of the private transaction between the seller and purchaser which might alter
the legal title under which the possession was held.

Further, it is sufficient if he continues in physical possession of the good that he had sold
to the purchaser, he can pass good title to a bonafide purchaser and the original purchaser

28
 will not be ousted. The section seizes to apply where there is a substantial break in
continuity of possession it does not matter whether lawfully or unlawfully.

Staffordshire Motor Guarantee Ltd v British Wagon Co. Ltd [1934] 2 KB 305 it was
held that due to the short break in continuity of possession the seller could not pass good
title.

In Mitchell v Jones (1905) 24 NZLR 932 it was held that once a sale and delivery is
completed the relationship between a seller and buyer seizes. But where again seller
acquires the goods is a bailee and has warrant to resale the good even to a bonafide
purchaser in good faith continuous possession may be lawful or unlawful but passes good
title to the second buyer.

6. Sale by a buyer in possession

S. 32(2) SGSSA 2017 states that where the person having bought or agreed to buy goods
obtains consent of the seller or possession or document of title the delivery by that person
or his mercantile agent under any sale or pledge or disposition to another person
receiving in good faith without notice of the lien or right of the original seller in respect
of the goods has the same effect like agent did so with the consent of the owner.

Newtons of Wembley Ltd v Williams[1965] 1 QB 560 it was held that the all buyers
bought in good faith without notice of defects were covered and protected by S.25(2).

7. Resale by an unpaid seller

S. 51(1) (c) SGSSA 2017 gives a right to an unpaid seller to re-sale the goods
notwithstanding the fact that property may have passed to the buyer.

However, under S. 31(1) SGSSA 2017 for stolen goods where offender is prosecuted to
conviction, property in stolen good reverts in the person who was owner of the good
irrespective of the immediate dealings with them whether sale or otherwise.

29
 DUTIES OF THE SELLER

All implied terms are duties imposed by law upon the seller and other include following;

a) Duty deliver goods

S. 34(1) SGSSA 2017 imposes a duty on the seller to deliver goods. S. 1 SGSSA 2017
defines delivery as physical transfer of possessions from one person to another.

Forms of delivery include;

i) Physical transfer of actual property
ii) Handing over to the buyer the means of control over the goods
iii) Delivery by atonement
iv) Delivery of documents of title

In Biddell Bros Ltd v E. Clemens Horst Co [1911]1 K.B. 214 it was held that delivery of
a bill of lading symbolizes delivery of goods.

v) Where goods in possession of a 3rd party acknowledges the buyer

vi) Delivery of buyer’s agent or carrier.

S. 40(1) SGSSA 2017 where a seller authorized to send goods to the buyer, delivery of
the goods to the carrier for purposes of transmission to the buyer is prima facie delivery.

In Galbraith & Grant Ltd v Block [1922] 2 KB 155 it was held that where goods are
received by a respectable person with access to the premises then there was effective
delivery thus loss fell on the buyer.

In Badische Anilin und Soda Fabrik v Basle Chemical Works [1898] AC 200 it was
held that where the buyer requested the foods be sent through post office thus the contract
of sale was complete and by delivery to the post office.

S. 40(2) SGSSA 2017 unless otherwise authorized the seller must make a contract with a
carrier on behalf of the buyer as may be reasonable regarding the nature of the goods and
circumstances.

S. 36(1) SGSSA 2017 whether it is for the buyer to take possession of the goods or the
seller to send them depends on the contract express or implied.

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In Galbraith & Grant Ltd v Block [1922] 2 KB 155 it was stated that where delivery was
at the buyer’s premises received and signed by a respectable as required by the contract
amounted to delivery.

Further under s. 36(2) SGSSA 2017 if it’s the sale of specific goods and due to the parties
knowledge is in a different place than where the contract is made then that place is the
place of delivery.

S. 35(1) SGSSA 2017 provides that unless otherwise agreed payment and delivery are
concurrent i.e. buyer must be ready and willing to pay the price in exchange of
possession in while the seller is will to give possession of goods to the buyer in exchange
for the price.

S. 41 SGSSA 2017 where the seller agrees to deliver goods at his own risk to the place
other than where they are when sold, the buyer must unless otherwise agreed take the risk
of deterioration in the goods incident to course of transit.

S. 44 SGSSA 2017 stipulates that the buyer is not bound to return the goods to the seller,
intimating to seller that he refuses to accepted them is sufficient.

S. 43(1) SGSSA 2017 states that a buyer is deemed to have accepted;

a) When intimates to the seller that he accepted them
b) When goods are delivered to him does an act inconsistent with the seller’s ownership

In Harmer v Cornelius (1858) CB (NS) 236 it was held that where a buyer discovers that
goods do not conform with the contract description that used them or sells or pledges
losses the right to reject them and is deemed to have accepted.

c) When after lapse of reasonable time the buyer stays with the goods without intimating
to the seller that he has rejected the goods.

Under S. 68 SGSSA 2017 reasonable time is a matter of fact.

In Colour Print Ltd v Pre-press Production [2005] KLR it was held that the buyer had to
intimate rejection of the good otherwise would have been deemed to accept 2 months was
beyond reasonable time.

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Buyer’s right of examination of goods

S. 42(1) SGSSA 2017 provides that where goods have been delivered to the buyer which
he has not previously examined, the buyer is not deemed to have accepted them unless he
has had reasonable opportunity to examine them to see whether they correspond with the
contract.

S. 42(2) SGSSA 2017 unless otherwise agreed when a seller tenders delivery of goods to
the buyer the seller is bound on request to afford the buyer reasonable opportunity of
examining the goods for the purpose of ascertaining whether they are in conformity with
the contract.

Time of delivery

In Hartley v Hyman [1920] 3 K.B. 475 it was held that in ordinary commercial contracts
of sale of goods time is of essence and failure to deliver at that time fixed in the contract
will amount to breach of a condition and entitle the buyer to exercise his right to reject
the goods.

Failure to deliver in reasonable time or hour is breach of condition entitle the buyer reject
the goods even where there is no loss suffered. In Bowes v Shand (1877) 2 App Cas 455
(HL) it was held that the buyer were entitled to reject the goods even though it was the
same rice and no loss suffered when the goods were not shipped in the right time.

S. 40(4) SGSSA 2017 provides that where the seller is bound to sale goods for the buyer
but without time fixed for sending them must send them within reasonable time.

S. 40(6) SGSSA 2017 provided that delivering is ineffectual unless made at a reasonable
hour and a reasonable hour is a question of fact.

Buyer can waive the condition extend the time and sue for damages as under s. 12(1)
SGSSA 2017 that waiver of conditions or treat breach of a condition as breach of a
warranty. To amount to a waiver there has to be a promise by the innocent party that will
not insist on specific performance of contract terms need not be express.

In Bremer v Vanden avenne – Izegem [1978] 2 Lloyds Rep 109 it was held that
unequivocal representation or waiver need not be said but enough to write or behave in a
way that makes the seller believe that the buyer is waiving any defect there might be in
the notice and accepting extension of date of delivery.

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Where an extension in time is given but not fixed, the seller is expected to deliver within
reasonable time as in s. 36(4) SGSSA 2017 where delivery date is waived before delivery
the seller is expected to give the buyer notice (reasonable) that he will not accept delivery
after a certain date.

Charles Rickards Ltd V Oppenheim [1950] 1 KB 616 it was stated that defendants were
entitled to reject the chassis as he had given the plaintiffs reasonable notice that delivery
must be made on a certain date.

b) Duty to deliver the right quantity

S. 37(1) SGSSA 2017 provides that where the seller delivers goods of a lesser quantity
than what he contracted to sell the buyer may reject them but if he accepts them then pay
for them at the contract rate.

S. 37(2) SGSSA 2017 stipulates where seller deliver goods larger than the quantity
contracted then the buyer may reject the excess or reject the whole. When accepts the
whole has to pay for it at the contract rate.

S. 37(3) SGSSA 2017 states that where goods delivered are mixed with goods of a
different description from the contract. Buyer can accept those in conformity with the
contract and reject the rest or reject the whole.

S. 30 (7) SGSSA 2017 is to the effects that all the above sections are subject to trade
usages, special agreement and course of dealing between the parties.

c) Duty to deliver goods of the right quality

Please see condition as to description and merchantable quality.

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 DUTIES OF A BUYER

Primarily in order for one to take delivery when tendered has to pay the price in
accordance with the terms and conditions.

i) Duty to pay the price

S. 9 SGSSA 2017 provides that price fixed by the contract or in an agreed manner or
determined by the course of dealing between parties or if not the reasonable price which
depends on the circumstances of the case.

S. 11(1) SGSSA 2017 states that unless otherwise time of payment are not deemed to be
of the essence to the contract and whether it is depends on the contract terms.

S. 48(1) SGSSA 2017 stipulates that an action is available to the seller where the buyer
fails to pay the price in accordance with the contract terms together with incidental
damages.

ii) Duty to take delivery

S. 34(1) SGSSA 2017 states that it is the duty of the seller to deliver the goods to the
buyer and of the buyer to accept them and pay for them in accordance with the contract
terms.

S. 45(1) SGSSA 2017 provides that when a seller is ready and willing to deliver the
goods and requests the buyer to take delivery and does not take delivery within
reasonable time his liable to the seller for any loss occasioned by his neglect or refusal to
take deliver and reasonable charge for care and custody of the goods. Where delivered to
him but upon refusal they got spoilt.

REMEDIES OF PARTIES

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REMEDIES OF UNPAID SELLER

S. 50(1) SGSSA 2017 stipulates that an unpaid seller is one who has not been paid or
tendered or has received a bill of exchange as conditional payment on which it was
received has not been fulfilled by reason of dishonor of the instrument or otherwise.

S. 50(2) SGSSA 2017 “seller” includes any person who is in the position of a seller, such
as, an agent of the seller to whom the bill of lading has been endorsed, or a consignor or
agent who has himself or herself paid, or is directly responsible for, the price.

Remedies are of two types:

a) Real remedies which are rights against the goods
b) Personal remedies which are rights against the buyer

A: Real remedies

S 51(1) SGSSA 2017 provides that notwithstanding that property in the goods may have
passed to the buyer, the an unpaid seller of good has by implication of law a lien on the
goods or right to retain them for the price while he or she is in possession of them, right
of stopping the goods in transit and right of re-sale.

1. Unpaid seller’s lien

Is the right to retain goods and can be exercise under circumstances in s 52(1) SGSSA
2017 if is still in possession of the goods has to retain them until payment where;
a) Goods have been sold without any stipulations as to credit,
b) They have been sold on credit but the terms of credit have expired or
c) The buyer becomes insolvent

S. 53 SGSSA 2017 provides that where part delivery has been made seller can exercise
his right of lien on the remainder of goods unless there circumstances which show waiver
of the lien of retention.

S. 54(2) SGSSA 2017 stipulates that the right of lien may be lost under these
circumstances;
a) Where the seller delivers goods to the carrier or other bailee for the purpose of
transmission to the byer without reserving the right of disposal,
b) When buyer or his agent lawfully obtains possession of goods or
c) By waiver of lien or right of retention

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In Mordaunt Bros v British Oil and Cake Mills Ltd [1910] 2 K.B. 502 it was held that
the defendants had not assented to the sale by merchants to the plaintiff so as to preclude
them from exercising their right of lien on unpaid seller.

To affect the lien the assent must be given to show the intention of unpaid seller to
renounce his right against the goods sold by the buyer.

2. Right of stoppage in transit

S. 55 SGSSA 2017 provides that unpaid seller may exercise his right of stoppage if he
has parted with possession;
i) When buyer has become insolvent
ii) Where goods are in course of transit / to resume possession and retain goods until
payment.

S. 56(1) SGSSA 2017 stipulates that the duration of transit lasts from the time of delivery
to the carrier or bailee purposely to transmit to the buyer and the buyer or his agent takes
delivery from carrier or bailee.

S. 56(2) SGSSA 2017 states that transit ends if buyer obtains delivery of the goods before
arrival at the appointed destination.

S. 56(3) SGSSA 2017 stipulates that transit ends when good have arrived at the
destination and the carrier acknowledges the buyer that he holds the goods on the buyers
behalf and continues in possession of the goods or bailee or agent of the buyer. It is
immaterial that the buyer had indicated a further destination from that.

S. 56(4) SGSSA 2017 provides that if the buyer rejects goods and carrier or to her bailee
continues in possession of them transit has not ended even if seller refuses to receive then
back.

S. 56(6) SGSSA 2017 stipulates that where the carrier refuses to deliver the goods to the
buyer or his agent transit has ended.

S. 57(1) SGSSA 2017 states that the unpaid seller may exercise his or her right to
stoppage in transit by taking actual possession of the goods on giving notice to the carrier
or bailee in whose possession the goods are.

S. 57(2) SGSSA 2017 provides that notice may be given to the person in actual
possession of the goods or his principal.
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S. 57(3) SGSSA 2017 for notice to be effectual must be given in reasonable time. That
enables principled to communicate to his agent in time to prevent delivery.

S. 57(4) SGSSA 2017 once notice by the seller is given to the carrier or bailee in
possession of the goods must re-deliver the goods as directed at the seller’s expense.

3. Unpaid seller’s right of resale

Is to re-sell goods to a 3rd party who acquires good title against that of the original buyer.

Right of re-sell is available where under S. 59(3) SGSSA 2017

i) Goods are perishable
ii) Notice of intention to re-sell has been given and no payment of price has been
made within reasonable time
iii) The right of resell has been reserved as per the contract of sale

S. 59(4) SGSSA 2017 where the seller expressly reserves a right to resale in case the
buyer should make default and on making default re-sales the goods the original claim is
rescinded but without prejudice to any claims for the seller may have for damages.

B: Personal rights against the buyer

a) Action for the price

S. 60(1) SGSSA 2017 where under a contract of sale the property in goods has passed to
a buyer but neglects or refuses to pay the price in accordance with the terms of the
contract seller may maintain an action against him or her for the price together with
damages incidental thereto.

S. 60(2) SGSSA 2017 where under the contract of sale the price is payable on a certain
day irrespective of delivery and buyer wrongfully neglects or refuses to pay the price
seller may maintain an action for the price or property in goods has not passed and goods
have not been appropriated to the contract.

S. 60(2) SGSSA 2017 Where, under a contract for supply of services, the service has
been supplied, and the buyer wrongfully neglects or refuses to pay for the service
according to the terms of the contract, the supplier may bring an action against the buyer
for the price of the service, together with any incidental damages.

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The remedy is suitable where property in goods has passed but where it has not passed an
action for damages for non-acceptance. Much as one for the price is more advantageous
as there right but no obligation to mitigate his losses in s. 60(2) SGSSA 2017.

b) Action for non-acceptance

S. 61(1) SGSSA 2017 where the buyer wrongfully neglects or refuses to accept and pay
for the goods, the seller may maintain an action against the buyer for damages for non-
acceptance.

It’s the only option where property in goods has not passed however where property has
passes it is an alternative to an action for price.

S. 61(2) SGSSA 2017 the measure of damages is the estimated loss resulting from the
ordinary course of events from the buyer’s breach.

S. 61(3) SGSSA 2017 the measure of damages where there is an available market for the
goods in question is the difference between the contract price and the market price at the
time when the goods were to be accepted or if no fixed time for acceptance when
acceptance was refused.

Where a seller re-sales at price lower than the market price will be awarded his full loss
but where sold higher than the market price court might not be willing to over
compensate him and limit the amount of damages to his actual loss unless court decides
that by the seller’s conduct assured the risk of market movement thus available for repay
resulting benefit.

Available market is a particular situation where the particular goods could freely be sold
and that there was demand sufficient to absorb readily all the good that were thrust on it
so that if the purchaser defaulted the goods could be disposed of as in Thompson (W.L.)
Ltd v Robinson (Gunmakers) Ltd [1955] 1 Ch 177.

c) Special damages and other rights

S 45(1) SGSSA 2017 where the seller requests the buyer to take delivery of the goods
within reasonable time and refuses or neglects as a result the seller can sue for loss
caused by that refusal to take delivery, reasonable charge for care and custody of the
goods.

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S 66 SGSSA 2017 parties have a right to sue for interest for special damages where they
may be recoverable under the law or recover money whose consideration has failed.

REMEDIES TO THE BUYER

1. Rejection of goods

Where there is breach of a condition on part of the seller, the buyer may repudiate the
contract by rejecting the goods.
i) S. 42(1) SGSSA 2017 buyer is not deemed to have accepted unless he has had a
reasonable opportunity to examine them
ii) S 43(1) SGSSA 2017 buyer losses the right to reject the good if he intimates to the
seller that he has accepted the goods or does any act inconsistent with seller’s
ownership or lapse of reasonable time.
iii) S 44 SGSSA 2017 buyer who has rejected the goods is not bound to return them.

2. Action for non-delivery

S 62(1) SGSSA 2017 where a seller or supplier wrongfully neglects or refuses to deliver
to the buyer may maintain an action against the seller or supplier for damages for non-
delivery.

S 62(2) SGSSA 2017 The measure of damages is the difference between the contract
price and the market or current price at the time or times when the goods ought to have
been delivered or supplied the services, or, if no time was fixed, then at the time of the
refusal to deliver or supply.

S 62(3) SGSSA 2017 breach by the seller or supplier, the buyer may—
(a) in good faith and without unreasonable delay, make any reasonable purchase of or
contract to purchase goods in substitution for those due from the seller; and
(b) recover from the seller as damages, the difference between the cost of the new
purchase price and the contract price, together with any incidental or consequential
damages, but less the expenses saved in consequence of the seller’s breach.

In practical terms a buyer should be able to succeed in getting substantial damages for
non-delivery when the market price is higher than the contract price.

Otherwise buyer would have acquired the goods from the market at a cheaper price and
would have suffered no loss.

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Market price rule will apply when even in resale to a 3rd party to fulfill the resale contract
by buying at in the available market as in Williams v. Agius [1914] A.C. 510.

If a seller knew or ought to know of the resale price buyer may be able to recover the
difference between the contract prices and resale price. Instead of being confirmed to the
market price rule and damages if any as in Re Hall & Rims Arbitration.

3. Damages for breach of warranty

S 64(1) SGSSA 2017 where the seller has breached a warranty or where the buyer has
chosen to treat a breach of condition as a warranty the buyer can maintain an action
against the seller for damages for breach of warranty. Buyer not to reject goods but set up
a diminution or extinction of the price or bring an action for damages for breach of
warranty.

S 64(2) SGSSA 2017 measure of damages is estimated loss resulting from breach of
warranty in course of events.

S 64(3) SGSSA 2017 in case of breach of warranty of quality the loss is the difference
between the value of the goods at the time of delivery to the buyer and the value they
would have had if they fulfilled the warranty.

Buyer may further sue for damages under s 13 (b) & (c) on party of the seller as well as s
12 SGSSA 2017.

4. Action for specific performance

S 63(1) SGSSA 2017 in any action for breach of contract to be delivered specific goods.
The buyer can bring an action for specific performance with giving the defendant the
option of retaining the goods on payment of damages. It is equitable and granted at
court’s discretion where damages are in appropriate.

5. Special damage and other rights

S 66 SGSSA 2017 buyer can recover interest or special interest not affected by the Act. It
applies where a buyer suffers consequential loss as a result of the seller’s breach of
contract.

A buyer who sues for breach of warranty of quality may be able to recover for personal
injuries caused because of defective goods.
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One who sues for non-delivery under S 62 (3) SGSSA 2017 may be able to claim
additional damages for wasted freight or losses on a sub-sale contract. Such will be
subject to limitation in posed by the general law like remoteness of damages.

The buyer’s right to recover money for total failure of consideration under the general
law is not affected by the Act.

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