Contract for Sale of goods

Question 1

What did the Competition and Consumer Act 2010 (Cth) replace?

Answer 1

The Trade Practices Act 1974 (Cth). the CCA adopted provisions of the TPA BUT significant changes were introduced in the area of CONSUMER PROTECTION.

Question 2

What did the defective goods regime adopted by the TPA imply INTO sale contract? What did these then permit in respect of actions?

Answer 2

The defective goods regime adopted by the Trade Practices Act implied terms into the sale contract (permitting then a cause of action for breach of contract) (Part V Div 2) and, in respect of the liability of manufacturers, imposed statutory causes of action (Part V Div 2A). This approach has been replaced by statutory ‘consumer guarantees’ which apply to both manufacturers and suppliers, are imposed by statute and do not depend upon the existence of a contract.

Question 3

Where is the new regime contained?

Answer 3

The new regime is contained in Sch 2 (titled ‘The Australian Consumer Law’) to the Competition and Consumer Act 2010 (Cth)

Question 4

What does ACL regulate?

Answer 4

The Australian Consumer Law regulates a number of aspects of conduct associated with the supply of goods and services, including misleading and deceptive conduct,3 unconscionable conduct4 and unfair contract terms.5 Importantly for the purposes of the supply of goods, it also seeks to safeguard the position of the consumer by the imposition of a series of ‘guarantees’ in Pt 3-2; provisions relating to safety standards, product bans and product recalls in Pt 3-3; and provisions which impose liability on manufacturers for goods with safety defects in Pt 3-5.

Question 5

Is the old TPA still relevant?

Answer 5

Yes. The former regime as it existed under the Trade Practices Act remains relevant in the following respects: first, to transactions and conduct which occurred prior to 1 January 2011 and,

second, where similar terms are used in the Australian Consumer Law, to assist in interpretation. The Trade Practices Act consumer protection cases are referred to on that basis where relevant.

Question 6

What is the Sale of Goods Act? What is its origin?

Answer 6

The Sale of Goods Act is for the most part a codification of the common law then existing and relating to the sale of goods.
The origin of all state sale of goods legislation is the United Kingdom’s Sale of Goods Act 1893. It has also formed the basis for the New Zealand legislation in the area. Decisions of the United Kingdom and New Zealand are therefore relevant in considering the interpretation of a particular provision of the legislation, as are decisions from all states and territories within Australia

Question 7

What does the Goods Act 1958 (Vic) apply to?

Answer 7

All domestic/intra-state sales of GOODS and transactions. applies to all contracts for sale of goods. NO monetary limit on the application of the Act nor is it limited to corporations.

Question 8

Is ACL same as or broader than, GA1958 Vic?

Answer 8

Broader in application - covers conduct of corporations, and with respect to all other persons by virtue of of operation of the applied ACL as a law of the states and territories S131. Its not intended to exclude or limit state or territory laws.

Question 9

How is the Sale of Goods Act interpreted?

Answer 9

Interpreted as a CODE.

Question 10

Can the operation of the SGA be excluded by agreement?

Answer 10

Yes.

Question 11

Was the exclusion clause effective in Shelton t/as Rich Shelton Mobile Mechanic Oaktech PL [2011] NTSC 11?

Answer 11

No.

Question 12

Can the effects of the ACL be excluded?

Answer 12

Not in respect of goods of a kind ordinarily acquired for personal, domestic of household use or consumption S64.

Question 13

What legislation or law s/b considered in cases involving sale of defective goods?

Answer 13

Consider the relevant sale of goods act and ACL along with any relevant causes of action at common law i.e. negligence.

Question 14

What criteria must exist for SOGA to apply?

Answer 14

There must be 1. Contract of Sale 2. of Goods 3. as a result of which property in the goods passes and 4 for a MONEY consideration.

Question 15

What is the definition of a contract of sale?

Answer 15

Defined as a contract whereby the SELLER transfers or agrees to transfer the property in goods to the BUYER for a money consideration, called the PRICE. Includes oral contracts.

Question 16

Is an agreement to sell same as SOG contract?

Answer 16

s3(1) includes an agreement to sell. Whether there was a SALE or merely an agreement or promise to sell in future depends on WHEN property in goods it to pass. SALE = property in goods has passed, AGREEMENT - its to occur in future OR is conditional s4(3).

Question 17

What is the significance of a SALE or an AGREEMENT to sell?

Answer 17

Affects the remedies available when there is a breach of contract. Where property in goods HAS passed - buyer refused to pay - Seller can sue for price agreed - s50(1). If NOT passed - so is an agreement to sell - SELLER remedy is damages, amount of which might be price. s51(1).

Question 18

Are gifted goods a ‘sale’ for purposes of the Act?

Answer 18

No, if no money is given as consideration.

Question 19

Is there a sale of goods if there is a retention of title clause and BUYER can sell them as AGENT of the SELLER?

Answer 19

Court have held this is NOT a sale of goods contract.

Question 20

Was this the same outcome in Garmin Australasia PL v B&K Holdings (QLD) PL [2018]?

Answer 20

No. The agreement was construed as contemplating the passing of title direct to the ultimate buyer. This approach was considered preferable to the alternative i.e that there was no contract of sale of goods because property was not transferred to the buyer prior to the goods being on-sold, because that would mean agreements containing such terms would fall outside the entire machinery of the SOGA.

Question 21

What about a contract for WORK AND INCIDENTALS?

Answer 21

No - is NOT a contract for sale of goods. Sometimes difficult to determine which it is.

Question 22

Is the characterisation of the contract as SOG vs NOT SOG relevant where goods or materials are DEFECTIVE?

Answer 22

No - it should not. It affects the LEGAL nature relationship between the parties, but not the outcome where the goods/materials supplied are defective. The courts have implied similar warranties to those that exist under the SOG legislation in contracts for work and materials at COMMON LAW.

Question 23

When else is the distinction between the 2 types of contracts important?

Answer 23

May be important in determining WHEN the property in good passes. Contract for work done - property passes when WORK DONE AND MATERIAL SUPPLIED OR INSTALLED.

Question 24

What is the test to be applied?

Answer 24

Test requires the court to assess the relative importance of the work done or the goods supplied. But in Lee, court effectively held that if the contract results in the sale of a chattel, it s/b construed as a sale of goods (Dentist selling dentures to patient held to be SOG).

Question 25

How was the test in LEE criticised in Amlink Technologies PL and Australian Trade Commission (2005) 86 ALD 370?

Answer 25

means that courts would identify contracts for the SOG in situations that were NEVER intended to be treated in that way i.e. radiologist providing xrays. Lawyers providing written advice document.

Question 26

How did Robinson qualify the test?

Answer 26

Qualified by reference to the substance of the contract.

Question 27

The facts in Robinson involved an ORAL contract for the commissioning of a portrait. What did the court find re whether it was a sale of goods or services?

Answer 27

HELD to be a contract for WORK AND LABOUR, and it did not need to meet the sale of goods legn in UK.

Question 28

What is the definition of Property in the SOGA?

Answer 28

Defined to mean the general property IN GOODS vs some special or limited interest (ie bailee or security interest). s3(1). PROPERTY = OWNERSHIP.

Question 29

What is the definition of Goods?

Answer 29

Defined to include ALL chattels personal other than things in action and money and to include emblements ad things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale. s3(1).

Question 29

Sale of software - goods or services?

Answer 29

Gammasonics Institute = contract of services. Statutory definition of goods for ACL extended to include computer s/ware and games.

Question 30

What are ‘emblements’?

Answer 30

Crops of the soil annually produced by agricultural labour. Does not include things growing naturally on the land. So = crops like grain, potatoes, but NOT fruit growing on trees.

Question 31

What are ‘things attached to or forming part of the land which are agreed to be severed’?

Answer 31

Sale of timber on land, provided the timber was agreed to be felled as part of the contract. Egmont Box Co Ltd v Registrar-General Lands.

Question 32

Are fixtures ‘goods’?

Answer 32

Generally, fixtures are not goods within the meaning of the definition: Theo Holdings Pty Ltd v Hockey (2000) 99 FCR 232; Burgess v Zinc Port Melbourne [2013] VSC 599 at [97]. A contract for the supply of a fibreglass swimming pool which was affixed to land by a third-party installer was held to be a sale of goods in Tranquility Pools & Spas Pty Ltd v Huntsman Chemical Co Australia Pty Ltd [2011] NSWSC 75. The court at [506] referred to Symes, where Kelly J held (at 550): ‘[T]here is no reason why a sale of goods may not be found within a contract one of the terms of which involves affixation of goods to land.’

Question 33

What are the categories of ‘goods’?

Answer 33

There are a number of different categories of goods. This is significant because the nature of the goods will (in the absence of agreement to the contrary) dictate when property in those goods is to pass and the remedies that are available to the buyer in the event the goods are not delivered. For example, in the case of specific goods, unless the parties agree otherwise, property is to pass when the contract for sale in respect of those goods is made: s 21 r 1.32 In relation to remedies, under s 53,33 where there has been non-delivery of specific or ascertained goods, the buyer may obtain an order for specific performance of the contract, provided damages are an inadequate remedy in the circumstances.
Categories of goods are:

specific;
unascertained;
ascertained; and
future

Question 34

What are specific goods?

Answer 34

Specific goods are goods identified and agreed upon at the time a contract of sale is made: s 3.34 It is critical to understand that specific goods are ones which the parties agree at the time of the contract are the unique goods the subject of the agreement. Goods appropriated to the contract after the agreement is entered into do become ‘ascertained’ goods, but they do not become ‘specific goods’ within the meaning of the definition.
Specific goods may be future goods, or ones which do not presently exist. They may, for example, include goods which are identified but not yet owned by the seller, or goods yet to be constructed but identified, for example, by reference to a plan number.
An example of a contract for the sale of specific goods is a contract for the sale of a particular motor vehicle

Question 35

Unascertained goods are?

Answer 35

Unascertained goods
6.8 There is no definition of unascertained goods in the Act. Unascertained goods are goods which are not specific goods; that is, goods which are not identified or agreed upon at the time of the making of the contract.
Certain subcategories of unascertained goods were identified in Re Goldcorp Exchange Ltd (in rec) [1995] 1 AC 74 at 89; [1994] 2 All ER 806 at 814:

Generic goods. These are sold on terms which preserve the seller’s freedom to decide how and from what source the seller will obtain goods answering the
[page 162]
contractual description. The seller can, in other words, source the goods from any stock, as opposed to a particular stock.
Goods sold ex-bulk. These are goods which are by express stipulation to be supplied from a fixed and predetermined source, from within which the seller may make his or her own choice (unless the contract requires it to be made in some other way) but outside which the seller may not go. For example, ‘I sell you 60 of the sheep now on my farm.’

It is impossible to transfer property in unascertained goods. Common sense dictates that the buyer cannot acquire title until it is known to what goods the title relates: Re Goldcorp at AC 90; All ER 814.

Question 36

Ascertained goods are?

Answer 36

Ascertained goods
6.9 There is no definition of ascertained goods in the Act. Atkin LJ in Re Wait [1927] 1 Ch 606 at 630 held that ascertained as contrasted with specific ‘probably means identified in accordance with the agreement after the time a contract of sale is made’ (emphasis added). Ascertained goods are not classifiable as specific goods when the contract is made but become identified or appropriated to the contract after the contract of sale is made. For example, a seller agrees to sell 100 tonnes of the 200 tonnes of wheat at the seller’s silo. If the wheat is loaded onto the buyer’s vehicle after the contract is made, then the goods have become ascertained after the moment of the formation of the contract and in the course of its performance, yet they were not specific at the time of the contract: Re Wait at 630

Question 37

Future goods?

Answer 37

Question 38

What is the significance of classification of the goods?

Answer 38

Classification dictates WHEN property can pass.

Question 39

Can contract overrule the principle that PROPERTY CANNOT PASS IN UNASCERTAINED GOODS?

Answer 39

No. it is a fundamental concept of personal property law.

Question 40

How can the price be determined?

Answer 40

Section 11 provides: may be fixed by contract, left blank and to be fixed in manner thereby agreed to, or maybe specified by course of dealing, or when not determined in accordance with s11, ‘reasonable price, usually referenced to Market price (11(1)).