Sale of goods act 1979- introduction

Question 1

What does the SGA 1979 apply to

Answer 1

• The SGA 1979 applies to contracts for the sale of goods made after 1st January 1894 (s.1)
• The Act is built upon a set of key definitions in determining how and when it applies
• The Act Applies only to contracts for the sale of goods as defined by the Act.
• A contract that does not satisfy all the elements of the statutory definition of contract of sale in the SGA 1979 will not be governed by the Act

Question 2

What is the definition of a contract for the sale of goods in s2 1

Answer 2

• The SGA 1979 applies to contracts for the sale of goods made after 1st January 1894 (s.1)
• The Act is built upon a set of key definitions in determining how and when it applies
• The Act Applies only to contracts for the sale of goods as defined by the Act.
• A contract that does not satisfy all the elements of the statutory definition of contract of sale in the SGA 1979 will not be governed by the Act

Question 3

Definition of a sale in the SGA

Answer 3

•Transfer of Property at once = Sale - s. 2(4) •Transfer of property in the future or subject to a future condition = An ‘Agreement to Sell’- s. 2(5)
•Agreement to sell becomes a sale when the time has elapsed or the condition has been fulfilled – s.2(6)
N.b. Contract of sale is a comprehensive term including both sale and agreement to sell – s.61.

Question 4

Define seller and buyer in the SGA

Answer 4

Seller and Buyer- s. 61(1):
•“seller” means a person who sells or agrees to sell goods”
•“buyer” means a person who buys or agrees to buy goods”

Question 5

Define goods in the SGA 1979 s 61 1

Answer 5

“‘goods’ includes all personal chattels other than things in action and money, (…) and in particular ‘goods’ includes 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 [and includes an undivided share in goods’]”

Question 6

What are personal chattels

Answer 6

• Personal chattels (personal property) - as opposed to chattels real (i.e. leasehold, interests in land etc.)
• SGA only applies to personal chattels which are choses in possession = tangible movables which can be moved around or carried.
• This would exclude:
• - Choices in action (personal rights of property which can only be
claimed or enforced by action and not by taking physical
possession Torkington v Magee [1902] 2 KB 427 at 430))
• - Intellectual Property Rights
• - Electricty and other forms of energy
• - Digitial materials, e.g. software, music, images in digital form, Databases and Information.

Question 7

What does s 5 1 SGA 1979 distinguish between good types

Answer 7

s.5(1) distinguishes between:
“Existing Goods” – Those goods owned or
possessed by the seller
“Future Goods” – Goods to be manufactured or acquired by the seller after the making of the contract
Note: a contract for the sale of future goods is an agreement to sell (s.5(3))

Question 8

Definition of unascerrtained goods

Answer 8

unascertained goods
Definitions
The SGA distinguishes between specific and

s. 61- Specific goods are those ‘identified and agreed on at the time a contract of sale is made. ’
“unequivocally designated at the time of contract as the unique article or articles that the contract
is concerned with.” (Clarke & Hooley et al, 306)

Question 9

Explain the case of Kursell 1927 in relation to specific and unascertained goods

Answer 9

Kursell v Timber Operators & Contractors Ltd
[1927]1KB298
• - S sold to B all trees in a Latvian forest.
• - Contract provided for sale of ‘all trunks and branches of trees but not seedling and young trees of less than 4 ft from the ground’
• - Forest nationalised by Latvian government but S argued that the property in timber passed to B and therefore the consequences fell on them.
• - CA held that timber subject to the contract was not specific goods, since the trees had not been identified
• - timber could not be identified until the time had come to cut it
• - therefore, still the property of S
•

Question 10

What categories do UG fall into

Answer 10

generic goods sold by description

• goods not yet in existence to be grown or manufactured
• an unidentified part out of a specific whole (Clarke & Hooley et al, 306).

Question 11

Definition of a contract of sale

Answer 11

A contract of sale requires the seller should transfer or agree to transfer the “Property” in the goods to the buyer = Ownership in the goods.

Question 12

Definition of price

Answer 12

Price- The contract will only be one of sale if the property in the goods is transferred to the buyer in exchange for a money consideration
•The consideration must consist of money
• s. 8 defines price:
‘(1) The price in a contract of sale may be fixed by the contract, or may be left to be fixed in a manner agreed by the contract, or may be
determined by the course of dealing between the parties
(2) Where the price is not determined as mentioned in sub-section (1) above the buyer must pay a reasonable price
(3) What is a reasonable price is a question of fact dependent on the circumstances of each particular case’

Question 13

Can the courts fix a reasonable price

Answer 13

Courts have the power to fix a reasonable price
However, if the price was left purposefully to be
negotiated in the future the court may declare that
there is no binding contract:
 May & Butcher ltd v R [1934] 2 KB17. An agreement to buy war equipment from the Crown at prices to be agreed upon from time to time between the parties was held not to be a concluded contract. But,
 Hillas & Co v Arcos LTD [1932] All ER Rep 494. HL held that uncertainty could be resolved by reference to the previous course of dealings between the parties. Therefore - a binding agreement.

Question 14

How are the sale of goods distinguished from other transactions

Answer 14

Where goods are transferred pursuant to an arrangement, which does not satisfy the requirements
of s.2 SGA the arrangement is not a contract for the sale of goods and the provisions of SGA will not apply.
Therefore it is important to distinguish between sales
and other transactions, such as:
a gift
contracts for barter or exchange bailment
hire purchase agreement

Question 15

What does Part IV ss 27-37 SGA say about performance of the contract

Answer 15

•Essential duties of parties to a contract of sale:
• - Delivery
• - Acceptance
• - Payment
s. 27: ‘It is the duty of the seller to deliver the goods and of the buyer to accept and pay for them in accordance with the terms of the contract of sale’

Question 16

What does the SGa say about delivery

Answer 16

s. 61 defines ‘delivery’ as a ‘voluntary transfer of possession from one person to another’
s. 28: ‘Unless otherwise agreed the seller must be ready and willing to give possession of the goods to the buyer in exchange for the price’
•The notion of delivery is closely linked to possession
•This may involve physical delivery of goods, but is not so limited.

Question 17

What are the duties of a seller

Answer 17

1. Actual or physical delivery: handing over the goods themselves to buyer, carrier, or other person
2. Symbolic delivery: handing something over, which symbolises the goods, e.g. a bill of lading where the goods are sold at sea
3. Constructive delivery: transfer of the right to possession of goods which are in the custody of a third party

Question 18

What does SGA s29 2 say about seller duties and delivery

Answer 18

Place of delivery
s. 29(2): In the absence of express or implied provisions in the contract-
‘the place of delivery is the seller’s place of business, or his residence; except if the contract is for specific goods which are known when the contract is made to be in some other place, then that place is the place of delivery’

Question 19

What does s 31 1 SGA say about delivery of goods to a buyer

Answer 19

• Where the contract provides that the seller is to deliver the goods to buyer, the delivery of goods to a carrier for transport is deemed to be delivery of goods to buyer:
s.31(1) ‘Where, in pursuance of a contract of sale, the seller is authorised or required to send the goods to the buyer, delivery of the goods to the carrier (whether named by the buyer or not) for the purpose of transmission to the buyer is prima facie deemed to be delivery of the goods to the buyer’.

Question 20

What does the SGA say about delivery time

Answer 20

Time of delivery
•At the time fixed by the contract, or;
s.29(3) Where under the contract of sale the seller is bound to send the goods to the buyer, but no time for sending them is fixed, the seller is bound to send them within a reasonable time.
Note s.59 – Reasonable time is a question of fact.

Time of delivery
•Whether any other stipulation as to time is or is not of the essence of the contract depends on the terms of the contract (s.10(2)).
•This bears on the available remedy in case of breach, i.e. whether a breach of condition or warranty.
•In commercial contracts, stipulations of time are considered to be of the essence, e.g. Hartley v Hymans [1920] 3 KB 475

Question 21

What do sections 30 1 and 30 2 SGA say about delivery and quantity

Answer 21

s. 30(1) The seller must deliver the correct quantity: ‘Where the seller delivers to the buyer a quantity of goods less than he contracted to sell, the buyer may reject them, but if the buyer accepts the goods so delivered he must pay for them at the contract rate’
s. 30(2) Where the seller delivers to the buyer a quantity of goods larger than he contracted to sell, the buyer may accept the goods included in the contract and reject the rest, or he may reject the whole.

Question 22

What are the qualifications of right to reject

Answer 22

Qualifications to the right to reject:
•Minimal variance in quantity is ignored (de minimis exception)
•S.30(2) a buyer may not reject the whole goods delivered if the shortfall or excess is so slight that it would be unreasonable for him to do so.
The onus of proof is on the seller.

Question 23

What does s37 1 say about buyers and taking delivery SGA

Answer 23

s. 37(1) ‘When the seller is ready and willing to deliver the goods, and requests the buyer to take delivery, and the buyer does not within a reasonable time after such request take delivery of the goods, he is liable to the seller for any loss occasioned by his neglect or refusal to take delivery, and also for a reasonable charge for the care and custody of the goods’

Question 24

What are the duties of a buyer around acceptance

Answer 24

The duty to accept the goods
•Acceptance prevents the buyer from rejecting the goods (note relevance to the breach of implied terms).
•s. 35 provides that buyer may be deemed to have accepted the goods and therefore lost the right to reject in 3 situations:
(1)(a) Where he expressly intimates his acceptance
Intimation of acceptance (acceptance note) does not constitute acceptance unless the buyer had a reasonable opportunity to inspect the goods at the time of giving the intimation.

(1)(b) Where he does some act inconsistent with the seller’s ownership
An act signifying affirmation performed after a reasonable opportunity to examine the delivered goods, such as a reselling, pledging or mortgaging the goods
s.35(4) Where after a reasonable period he retains the goods without indicating that he had rejected them.
•Reasonable time? A question of fact (s. 59)
•Under s. 35(5) one of the relevant elements is whether the buyer had ‘a reasonable opportunity of examining the goods’

Question 25

What are the duties of a buyer re payment

Answer 25

Duty to pay the price
s. 27- Buyer is bound to pay the price in accordance with the terms of the contract
s. 28- in the absence of agreement to the contrary, delivery of the goods and payment of the price are concurrent conditions
•This means that unless otherwise agreed the buyer does not need to make payment until the delivery is made.