Luật học - Chapter 12: Sale of goods

This is the prescribed textbook for your course.Available NOW at your campus bookstore!Sale of goodsChapter 1212-2Learning objectivesAt the end of this chapter you should understand:the main statutory and common-law rules relevant to the sale of goodsthe difference between specific, unascertained and future goodsthe difference between contracts for the sale of goods and agreements to sellthe definition of a contract for sale of goodsthe rules relating to the passing of title in goods from the seller to the buyerthe application of the exceptions to the nemo dat rulewhen implied condition and warranties apply and the consequences of their breachthe remedies available to an unpaid seller or to a buyer if seller is in breach of contract.IntroductionWhen goods are sold, there exists a contract for the sale of goods.Both common law principles and statutory provisions apply to these types of contracts.Relevant legislationEach state has its own Act that regulates the sale of goods. All states but Victoria title them the Sale of Goods Act.These acts apply to all types of entity from companies to individuals and to all types of goods.Requirements of the legislation:Contracts must involve an exchange of monetary consideration for goods.Ownership of goods must pass to the buyer.Only covers contracts for sale of goods, not for work done or materials supplied, otherwise the provisions of the relevant Sale of Goods Act cannot be relied upon.In NT, WA and Tasmania, such contracts must be evidenced in writing, elsewhere, maybe verbal, written or implied.Types of goods The type of goods determines the point in time at which ownership will pass to the buyer, along with the 'risk' associated with those goods.Specific goods:in existenceidentifiable at time of contract.Unascertained goods:describednot identifiable at time of contract.Future goods:to be acquired by the sellermanufactured by seller after contract made.Distinction between a contract for the sale of goods and an agreement to sellSale: Property or title in the goods passes to the buyer at the time the contract is made.Agreement to sell: Title or property in goods is to pass at some point in time after the contract is made.Distinguishing contracts for the sale of goods from other contractsCovers goodsThe delivery of the goods is the main substance of the agreementnotThe work done or materials supplied—involving skill and effort with goods resulting from the effort.Property in goods and possession of goodsProperty in goods:Ownership or title to goods, i.e. risk of goodsPossession in goods:Custody or control of goodsWhen property (and risk) in goods passes, ownership passesType of goods—indicates when property or title ingoods passes to buyer.Specific/ascertainedAt time parties intend it to pass, considering:terms of contractconduct of partiescircumstances.Future/unascertained:At time goods become identifiable and buyer has been notified, or when the parties to the contract of sale intend that it should pass.Specific rules for determining when property in goods passesRule 1Unconditional contract for specific goods:When contract is madeRule 2Specific goods that need to be placed in a deliverable state:When goods are in a deliverable stateBuyer has been notifiedRule 3Specific goods that need weighing or measuring to obtain their price:When goods have been weighed or measuredBuyer has been notifiedSpecific rules for determining when property in goods passes (cont.)Rule 4Goods purchased on approval:Buyer communicates approval or acceptance of the goods to the seller.orBuyer does not communicate approval or acceptance to the seller but:keeps goods without notice of rejectionon expiration of any specified timeon expiration of reasonable time.Specific rules for determining when property in goods passes (cont.)Rule 5(1)Future or unascertained:Goods in deliverable stateUnconditionally appropriatedBuyer assentsRule 5(2): Delivery of future or unascertained goods to a carrier:When delivered to the carrierRomalpa clausesRetention of title clausesBuyer cannot claim title before full payment has been received. Seeks to protect seller from buyer’s failure to pay.Must be very carefully drafted to be effective.Seller without titleThe common law principle nemo dat quod non habetmeans sellers of goods cannot pass better title than they actually have.Seller without title (cont.)EstoppelSale by a mercantile agentSale by a seller still in possessionSale by a buyer in possession (without title)Statutory and common law power of saleSale in the market overtSale under voidable titleEstoppelIf the owner creates an impression by word or conduct that another party has the authority to sell the goods, and a purchaser buys those goods in good faith without knowledge of the deficit in title, for value, the purchaser will gain good title. Performance of a contract for the sale of goodsRules regarding deliveryDuty of seller to deliver:place of deliverytimetimingthird person in possessionexpensescarrierdelivery by seaquantityinstalment deliveriesShipping contractsCIF (Cost insurance freight)Price includes:cost of the goodsinsurance (seller organises)freight (seller organises).FOB (Free on board)Price includes:cost of the goodsdelivery on board shipinsurance (buyer organises)freight (buyer organises).Rules regarding acceptanceSeller notifiedReasonable timeConduct of buyerRejectionRules regarding paymentPay correct amount on delivery:contracted price orreasonable priceRelationship between the sales of goods Acts and the ACLThe sale of goods Acts imply certain conditions and warranties into contracts for sale of goods which must be met by the seller.Under the state sale of goods Acts the parties can agree to exclude these implied terms and conditions.The Australian Consumer Law is federal law which applies across Australia and provides for non-excludable ‘guarantees’ by the seller where the buyer is a ‘consumer’ (discussed in Chapter 13).The Australian Consumer Law takes precedence over the sale of goods Acts where both apply.Relationship between the sales of goods Acts and the ACL (cont.)The guarantees are very similar to the implied conditions and warranties provided in the sale of goods Acts.Therefore, the sale of goods Acts will continue to apply to sale of goods not regulated by the Australian Consumer Law, e.g. business to business sales where the goods are purchased for resupply—namely where the buyer does not fall into the classification of a ‘consumer’.Implied conditions Breach of an implied condition will terminate the contract and allow damages to be claimed.As to title, it is implied that the seller has the right to sell the goods to pass good title to the buyer the seller must possess good title.Correspondence with description:Goods must correspond with the description where goods have been sold by description. Merchantable quality:Goods must be fit for a purpose for which goods of that description are normally used, unless an examination by the buyer should have revealed any defect.Implied conditions (cont.)Fitness for purpose:Where the buyer buys goods in reliance upon the seller’s skill, after purpose of good is known to sellerSale by sample:The quality of the bulk of goods supplied must correspond with the quality of the sample suppliedThe buyer must have a reasonable opportunity to compare the bulk of the goods to the sample.The goods must be free of defect rendering them unmerchantable.Implied warrantiesBreach will enable the innocent party to claim damages.The buyer shall have quiet possession.The goods shall be free of any undisclosed encumbrances.Remedies for breach of contract for sale of goodsRights of the unpaid sellerAgainst the goods:Right to withhold deliveryRight to a lien (possessory)Right to stop goods in transitRight to resell the goodsAgainst the buyer (breach of contract):Sue for damagesSue for the priceRemedies for breach of contract for sale of goods (cont.)Rights of the buyer:Damages for non-delivery of goodsBreach of warranty of qualitySpecific performanceRescission of contract