Sale of Goods- is there a SOG contract? Flashcards
What Act did the SOGA 1979 replace?
The SOGA 1893. 1979 Act only consolidates and re-enacts the 1983 Act. Mostly wording remained the same. The 1893 Act was a codifying statute that brought together common law on sale of goods.
s.62(2) 1979
‘The rules of common law, except insofar as they are inconsistent with the Act, apply to contracts for the sale of goods’
Re Waite (1927) CoA
Case: W owned 1,000 tonnes of wheat and contracted to sell 500 to H, who paid in advance. W went bankrupt before anything had been done to identify the 500 tonnes from the 1,000, so it formed part of his estate and H was left to prove in the bankruptcy.
Decision:
- H could not assert a proprietary right to his share of the wheat based on trusts, because this is a sale of goods contract covered under the Act.
- Aktin- It would have been futile for Parliament to have created an elaborate structure of rules dealing with rights at law, if it also intended to leave subsisting equitable rights inconsistent with, more extensive, and coming into existence earlier than the rights in the code.
Re Stayplton Fletcher (1994)
Similar outcome to Wait but under 1979 Act. A contract for sale of goods did not of itself create an equitable interest in property.
s.2(1)
Requirements for a sale of goods contract. 1. A transfer of or agreement to transfer the property; 2. In goods; 3. For money consideration called the price
- Transfer of property- required sections?
s.2(1), s.61(1), s.2(3)-(6)
s.61(1)
Transfer of property- meaning of property. Property refers to the ownership of the goods. ‘The general property in goods and not merely a special property’ (i.e must have full general ownership).
Special Property
A qualified or residual right in property e.g that of a bailee, a pledge etc. A bailee has title to the goods which he can deal with, e.g. by a sub-bailment, but he does not have the GENERAL property (the indefeasible property) in the goods, and so a transfer of his interests as a bailee cannot be a sale.
s.2(3)
A contract for sale may be absolute or conditional.
s.2(4)
A sale is where the property in goods is transferred under the contract.
s.2(5)
An agreement to sell is where there is an agreement to transfer property in the goods at some future point.
s.2(6)
An agreement to sell becomes a sale when the time elapses on the conditions are fulfilled subject to which the property in the goods is to be transferred.
PTS Energy Shipping v OW Bunker (2016) SC
Case: OW supplied bunkers of marine fuel to PST on 60 days credit and terms that ownership would not pass to PST until the goods were paid for. The contract did however permit PST to use the fuel during the credit period.
Mance:
- This was not a transfer within the meaning of s.2- the property in the goods was not conferred from the seller to the buyer under (4), but they were able to use the goods despite this, so it is not sale of goods in character.
- The use of credit is so valued in the marine fule industry, so all contracts such as this are not sale of goods contracts.
- The seller’s argument that the contract was an agreement to sell under (5) which was conditional (3) on there still being some unburned fuel when title passed to make it a sale contract under (6) was incorrect.
- This would mean that the character of the contract depended on an event which may or may not occur.
- The contract was for the sale of all of the bunkers. It could not be severed in the way suggested. For these sections to apply they must apply to the whole contract.
Goods- required sections?
s.2(1), s.61(1), s.5
s.61(1)- goods
Goods includes ‘all personal chattels other than things in action and money and in particular 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.
s.5
Existing or future goods. (1) May be existing or future goods, owned or possessed by the seller or goods to be manufactured or acquired by him after the making of the contract of sale (future goods)
(2) Can make a sale of goods contract for goods which acquisition of by seller depends on a contingency which may or may not happen (but will be an agreement to sell not a sale under the time when conditions to obtain are met- s.2(6))
(3) Where by a contract of sale the seller purports to effect a present sale of future goods, the contract operates as an agreement to sell the goods (i.e goods which he doesn’t have yet).
Fern Computer Consultancy (2014)
Goods- when software is supplied on CDs there is a real prospect of success in arguing that that is the supply of goods. Where it is accompanied by a physical dongle and documentation the argument is even stronger. While there is an argument that what is really being supplied is software, which is not goods, that argument is not so strong as to make the contrary unsustainable.
Things which are not goods?
Electricity and other forms of energy, computer software, information, databases, land and things attached to it (unless crops or things agreed to be severed before sale or under the contract)
Saunders v Pilcher (1949)
For a thing attached to land to form the good in a sale of goods contract the parties must contemplate that it would be ‘severed’ in accordance with s.6(1) either under the contract or before sale. Cherry orchard sold with its crops. To avoid tax the parties made a sale of land contract and a separate sale of goods contract for the cherries in the orchard. Held: Only one transaction. A conveyance of land, not a sale of goods. Parties did not contemplate that the cherries would be severed under the contract of sale.
Underwood v Cement Syndicate (1922)
Fixed goods. U agreed to sell S a condensing engine which was a trade fixture in the premises. It was fixed to a bed of concrete and screwed down. As part of the contract U agreed to detach it from the land.
Rowlatt: A fixture to the premises is different to a loose chattel. To convert it to a loose chattel a process had to be performed. It seems a safe rule that if a fixture had to be detached so as to make it a chattel, the act of detaching much be done before it can deliverable.
For a money consideration called the price- sections?
s. 2(1)- excludes non-monetary barter or exchange and gifts.
s. 8- Acertainment of price.
s. 9- valuation of price by 3rd party.
Dawson (Clapham) v Dutfield (1936)
‘Money consideration called the price’ can be part money and part exchange.
If a parties agree on a monetary price the entire price doesn’t have to be satisfied by money alone. It would not matter if A pays B for a good with money and a chattel, for e.g. Under the contract A was to buy 2 lorries from B for £475, of which he paid £250 and traded in 2 other vehicles for the remaining £225 (contract failed for but not for this reason- due to late delivery).
Implied terms in the buyer’s favour in sale of goods contracts- sections?
s.12, s.13, s.14, s.15
s.12
(1) Subject to (3), Implied term of part of seller that he has a right to sell the goods, or will have such a right at the time property is to pass.
(2) Subject to (3), Implied term that the goods are free from any charge or encumbrance not disclosed/known to the buyer before the contract is based,, and that the buyer will enjoy quite possession of the goods, except so far as it may be disturbed by the owner or another p entitled to a charge or encumbrance disclosed/known to buyer.
(3) This subsection applies to a contract of sale where there appears from the contract or is to be inferred from its circumstances an intention that the seller should transfer only such title as he or a third person may have.
(4) In a contract to which subsection (3) above applies there is an implied term that all charges or encumbrances known to the seller and not known to the buyer have been disclosed to the buyer before the contract is made.
(5) In a contract to which subsection (3) above applies there is also an implied term that none of the following will disturb the buyer’s quiet possession of the goods, namely—
(a) the seller;
(b) in a case where the parties to the contract intend that the seller should transfer only such title as a third person may have, that person;
(c) anyone claiming through or under the seller or that third person otherwise than under a charge or encumbrance disclosed or known to the buyer before the contract is made.
s.13(1)
Sale by description- Where there is a contract for the sale of goods by description, there is an implied term that the goods will correspond with the description.
Arcos v Ronassen (1933)
s.13(1) implied term. Contract for wood to be 1/2 inch thick. It was actually 9/16 inch thick. Buyer entitled to reject goods under [s.13]. BUT note potential effect of s.15A now if breach is slight.
s.14(2)
Satisfactory quality- Where the seller sells goods in the course of a business, there is an implied term that the goods supplied under the contract are of satisfactory quality.
2A- For the purposes of this Act, goods are of satisfactory quality if they meet the standard that a reasonable person would regard as satisfactory, taking account of any description of the goods, the price (if relevant) and all the other relevant circumstances.
2B- For the purposes of this Act, the quality of goods includes their state and condition and the following (among others) are in appropriate cases aspects of the quality of goods—
(a) fitness for all the purposes for which goods of the kind in question are commonly supplied,
(b) appearance and finish,
(c) freedom from minor defects,
(d) safety, and
(e) durability.
2C- The term implied by subsection (2) above does not extend to any matter making the quality of goods unsatisfactory—
(a) which is specifically drawn to the buyer’s attention before the contract is made,
(b) where the buyer examines the goods before the contract is made, which that examination ought to reveal, or
(c) in the case of a contract for sale by sample, which would have been apparent on a reasonable examination of the sample
Aswan Engineering v Lupidine (1987)
s.14(2) implied term. S supplies water proofing compound in plastic pails to B in Kuwait. Pails collapse in Kuwait due to heat and all goods are lost.
No breach of 14(2) as the pails were of satisfactory quality for the purposes for which they were usually bought.
