SALE OF GOODS REVISION OVERVIEW.

Question 1

Define the contract of sale of goods

Answer 1

s2(1) of Sales of Goods Act:

Contract by which seller transfers/agrees to transfer property in goods to the buyer for a money consideration (price).

Question 2

Define the term ‘contract’

Answer 2

Identical to contract of common law: offer, acceptance, consideration, intention to create legal r/s.

Question 3

Define the term ‘property’

Answer 3

Ownership

Question 4

Define the term ‘goods’

Answer 4

s61(1) of Sales of Goods Act:

All personal chattels other than things in action and money.

Question 5

Explain the term ‘personal chattel’

Answer 5

• Something physical
• Land and houses don’t come under that they come under ‘real property’
• exception to this land and houses rule is industrial growing crops or things attached to/ forming part of land that were agreed to be severed before sale or under contract of sale.

Question 6

Explain the term ‘a thing in action’ + include an example

Answer 6

Refers to an intangible right enforceable by legal action
-so it has no intrinsic value but its value instead derives from the right to sue in respect of it.
example- cheques, shares in companies, patents, copyrights.

Question 7

Briefly explain case of The Mayor and Burgesses of the London Borough of Southwark v IBM UK Ltd [2011]

Answer 7

• Case regarding w/n sale of software is a contract of sale of goods
• contract stated title, copyright + all other proprietary rights in software = vested in manufacturer
• purchaser only obtained license to use
• held: no transfer of property in goods for purpose of SGA

Question 8

But is computer software ‘goods’ for the purpose of SGA?

Answer 8

Akenhead J stated that in principle software could be ‘goods’ for the following reasons:

• no restriction in SGA on goods being excluded from act b/c they are of low value. Example- CD. It is low value yet still a physical object so should be considered as goods.
• recordings on CDs to add functions just gives it more attributes. Music CD is ‘goods’ so no difference in case of software.
• definition of ‘goods’ = inclusive not exclusive. SGA not excluding anything which might properly be considered goods.

Question 9

Explain what cases are used to analyse whether computer software would be considered ‘goods’.

Answer 9

St Albans City and District Council- necessary to distinguish b/w program and disk carrying it.
Southwark v IBM- important to examine contractual terms which come following to which customer acquires system.
So- if like in St Albans City case the purchase was of a license to use it may not be considered transfer of property UNLESS like said in Southwark v IBM, that a term in the contract was said to involve an agreement highlighting transfer of property to the buyer, it would be sufficient to be classified as ‘goods’ for purpose of SGA.

Question 10

Briefly explain the requirement of money consideration in SGA

Answer 10

For it to be a contract of sale of goods MONEY exchange is required. It is not enough to just trade things of economic value.

-if money is exchanged due to ones goods being worth more than the other THEN 2 contracts of sale are formed.

Question 11

What are the cases for Money Considerations? Briefly explain them both

Answer 11

1) Aldridge v Johnson (1875) - farmer exchanged bullock for barely. Barely worth more, so difference paid in cash. Held: 2 contracts of sale existed as parties gave price to both lots of goods and consideration was MONEY.
2) Esso Petroleum Ltd v Commissioners of Customs and Excise [1976] - Garages supplied FREE GIFT to motorists for ever 4 petrol gallons purchased. Held- not contract of sale of goods as consideration in return for gift wasn’t money it was a contract for the petrol.

Question 12

When answering a question on sale of goods, it is essential to have in mind that the SGA only applies to contracts of sale of goods defined by s2(1) of SGA. Contract will not be of sale of goods unless:

Answer 12

• transfer or agreement to transfer property exists (this EXCLUDES other contracts like hire purchase, hire, etc that aren’t governed by SGA.
• Consideration has to be money.

Question 13

What’s the difference b/w the terms: ‘sales’ and ‘agreements to sell’ ?

Answer 13

Sale- with a sale, property in goods = transferred from seller to buyer as soon as contract formed s2(4) SGA.
Agreement to sell- transfer of property in goods takes place at a future time/ subject to a condition later to be fulfilled s2(6) SGA.

Question 14

At the time of making a contract, goods will be either specific or Unascertained. Explain the difference of the two terms.

Answer 14

Specific goods- goods identified + agreed upon at time contract of sale is made s61(1) SGA. So both buyer and seller have agreed upon exactly which goods will be sold under contract.

Unascertained goods- not identified in SGA, are instead all goods that are not specific.

Question 15

What 2 types of classifications are there of goods that form subject of a contract of sale?

Answer 15

1) Existing goods

2) Future goods

Question 16

Define existing goods and future goods?

Answer 16

Existing goods- good either owned/ possessed by seller s5(1)

Future goods- goods to be manufactured/ acquired by seller after making of contract of sale s5(1) + s61(1)

Question 17

What is important to FIRST understand regarding the analysation of existing goods and future goods?

Answer 17

W/n SGA governs the transaction.
SGA implies into contracts of sale of goods certain terms ie) satisfactory quality + fit for purpose.
-this imposes strict liability on seller
-such terms are implied into all sales of goods contracts so parties don’t need to expressly agree to them.
-if SGA doesn’t apply to transaction + no other statute applies = terms ARE NOT statutorily implied and liability is based on common law and likely to be fault-based.

Question 18

List all the implied terms in other types of transaction and why they aren’t governed under SGA

Answer 18

Exchange/Barter - IT = Supply of Goods and Services Act 1982 ss2-5: no money consideration s2(1) SGA

Hire- IT = Supply of Goods and Services Act 1982 ss6-11: No transfer/ agreement to transfer ownership s2(1) SGA

Hire Purchase- IT = Supply of Goods and Services Act 1973 ss 8-11 + Consumer Credit Act 1974: no obligation to purchase goods so no obligation to transfer property in goods s2(1) SGA

Services INCLUDING work and materials contracts (where goods are also supplied) - IT = Supply of Goods and Services Act 1982 ss2-5 and 12-16: provision of overall service is the substance of the contract instead of transfer of property in goods s2(1) SGA

Question 19

What contracts do CRA 2015 and SGA 1979 deal with?

Answer 19

SGA - business to business contracts + consumer to consumer contracts
CRA - Business (trader) to consumer (for non business related reasons) contracts

Question 20

Generally, how is the Consumer Rights Act arranged?

Answer 20

Into 3 parts. 
P1- Consumer contracts for goods, digital content and services 
P2- Unfair terms 
P3- Miscellaneous + general provisions
BUT Main focus on parts 1 +2.

Question 21

Define the term ‘trader’ for the purposes of the CRA 2015

Answer 21

s2(2) CRA 2015: Person acting for purposes related to their trade (business) whether acting personally or through another person acting on behalf of the trader.

Note- ‘person’ also refers to multiple people, charities, companies etc. They call all be persons and referred to under term ‘trader’.

Question 22

Define the term ‘consumer’ for the purposes of the CRA 2015

Answer 22

s2(3) CRA 2015: Person acting wholly/ mainly outside of their business, trade, or craft.

Question 23

What does section 2(4) of the CRA 2015 state and how does s2(5) link to this ?

Answer 23

In the situation where a trader accuses the consumer of not acting in purposes outside of their personal trade/ business, they are required to prove it.

S2(5) a - A person is not a consumer in relation to a sales contract if goods are second hand and are sold at auction.
S2(5) b- and if individuals have the opportunity of attending the sale in person

Question 24

Define the term ‘business’ for the purposes of the CRA 2015

Answer 24

s2(7) CRA: includes activities of any government department/ local/ public authority.

Question 25

Define the term ‘goods’ for the purposes of the CRA 2015

Answer 25

s2(8) CRA: means any tangible moveable items, but that includes water, gas and electricity if and only if they are put up for supply in a limited volume or set quantity.

TMI - refers to physical items that can be moved so would exclude immovable physical items such as land.

Question 26

Define the term ‘Digital content’ for the purposes of the CRA 2015

Answer 26

s2(9) CRA: means data which are produced and supplied in digital form.

Where supply occurs on a tangible medium ie) DVDs, special rules apply.

Question 27

For Part 1 of the CRA to apply what must occur?

Answer 27

A contract to supply goods must be either: a sales contract, a contract for the hire of goods, hire purchase agreement/ contract for transfer of goods.

Question 28

What is the outcome regarding a seller contracting for future goods?

Answer 28

Where a seller contracts future goods, the contract
operates as an agreement to sell the goods, s 5(3)
SGA.

Question 29

Why is the distinction b/w specific and unascertained goods important?

Answer 29

S.16 SGA: ‘where there is a contract for the sale of

unascertained goods no property in goods is transferred to the buyer unless and until the goods are ascertained’

Question 30

What is the exception to s.16 SGA regarding contract for unascertained goods?

Answer 30

Exception > s. 20A SGA, undivided shares in goods

forming part of a bulk

Question 31

In order for s20A (the exception for contracts regarding unascertained goods) to occur what are the requirements?

Answer 31

In order for S 20A to apply, the following conditions must be satisfied:

a) the contract must specify quantity of goods to be sold;
b) goods must form part of an identified bulk;
c) the buyer must have prepaid;
d) It does not apply where parties agree otherwise