SALE OF GOODS 1

Introduction

Under the topic Law of Contract, general common law principles of contract were discussed.
You will have observed that the principles of law were mainly case law and no reference was
made to any Jamaican legislation. Sale of Goods is a type of contract governed by legislation.
Jamaica has a Law called The Sale of Goods Act (SOGA) which governs sale of goods. The
common law principles apply to areas not covered by the Sale of Goods Act.
Sale of Goods involves the selling and buying of tangible items referred to in law as choses in
possession. These are items that are tangible and movable. Items which when you buy you may
physically move at some point in time from the seller. Examples of goods in this context are
computers, books, cars, furniture etc. Service contracts, land contracts, sale of computer software
are not sale of goods.

Definition and Essentials of Sale of Goods

A contract for the sale of goods is a contract whereby the seller transfers or agrees to transfer
property in goods to the buyer for a money consideration called the price2.

This definition covers both a contract of sale and an agreement to sell.

In a Contract of sale, property in goods is transferred from seller to buyer at the time of contract.
In an agreement to sell, transfer of property in goods takes place at a future time or subject to
condition to be fulfilled later. Like other types of contracts, sale of goods involves two parties
(buyer and seller) and the intention of these parties is to transfer ownership (property) of the
goods at some point in time whether immediately or in the future. Another important element is
that money is always involved. Consideration may be wholly money or partly money. If no
money is involved then it is not sale of goods.

Formalities

Sale of goods contract may be made in any of the following ways:

- In writing (with or without seal)
- By word of mouth
- Partly in writing and partly by word of mouth
- May be implied from the conduct of the parties3

Please note that the essential elements of a valid contract still apply in sale of goods.

Types of goods

In sale of goods, the contract may involve different types of goods. The goods may or may not
have been acquired by the seller and the buyer may or may not have been able to physically
identify the goods at the time of contact. When goods are described as existing or future, they are
being described from the seller’s perspective and when they are described as specific or
unascertained, they are being described from the buyer’s perspective. In identifying the type of
goods, it is expected that goods will be described both from the perspective of the seller and the
buyer given sufficient information. Students should note that the same goods cannot be both
future and existing; and both specific and unascertained.

It is important to know the type of goods at the time of contract because the applicable rule on
transfer of ownership is dependent on the type of goods in question. The types of goods are as
follows:
1
The Sale of Goods Act of Jamaica is the relevant legislation for this topic therefore students should be careful
when reading the recommended text. Even though the content of the English Sale of Goods Act are very similar to
the Jamaican, the numbering of the sections are different and for the purposes of this module, students are expected
to use the Sale of Goods Act of Jamaica.
2
Section 2(1) SOGA
3
Section 4
O.H Akinladejo, Lecturer, 1
School of Business Administration, UTech
 - Existing goods: These are goods owned or possessed by the seller at the time of contract.

- Future goods: These are goods to be manufactured or acquired by the seller after the
making of the contract.

- Specific/ascertained: These are goods that can be identified by buyer at the time of
contract.

- Unascertained: These are goods that cannot be identified by the buyer at the time of
contract or yet to be taken from bulk

Sale of Perished Goods

SOGA provides4 that where there is a contract for the sale of specific goods and the goods
without the knowledge of the seller have perished at the time when the contract is made, the
contract is void. This is a situation where goods being sold was destroyed either before or at the
time the seller and buyer are entering into the contract. The purported sale is void because the
subject matter of the sale is non existent, similar to a situation of mistake in contract.

SOGA also provides5 that where there is an agreement to sell specific goods and subsequently
the goods without any fault on the part of the seller or buyer, perish before the risk passes to the
buyer, the agreement is thereby avoided. The implication of this section is that even though there
would have been a valid contract at the time of contract and before the destruction of the subject
matter, the destruction of the subject matter before the passing of ownership to the purchaser
creates an opportunity for either party to avoid the contract. The seller cannot be sued for breach
of contract by the buyer and the buyer cannot be compelled to take delivery of the perished
goods or pay for them. Where the buyer has paid, the payment will have to be refunded upon
demand by the buyer.
See Barrow Lane and Ballard v Phillips

Determination of Price of Goods

Price of goods may be:

- fixed by contract
- left to be fixed in manner agreed
- determined by the course of dealing between parties
- reasonable price if no price was fixed or agreed.6

In addition where there is an agreement to sell goods on the terms that the price is to be fixed by
the valuation of a third party, and such party cannot or does not make such valuation, the
agreement is avoided provided that if the goods or any part thereof have been delivered to and
appropriated by the buyer he must pay a reasonable price7.

Transfer of property/ownership

Understanding transfer of ownership/property is crucial in sale of goods because usually risk

follows ownership.8 The owner of the goods is the party at risk. This is usually why insurable
interest resides with the owner. Unless otherwise agreed, the goods remain at the seller’s risk
until ownership is transferred to the buyer and when ownership is transferred to the buyer, the
buyer is at risk whether possession is given or delivery is made. It is important to note as will be
explained later in this unit that usually the place of delivery is the seller’s place of business and

4
Section 7
5
Section 8
6
Section 9(2)
7
Section 10(1)
8
Section 21
O.H Akinladejo, Lecturer, 2
School of Business Administration, UTech
 if he has no business place then his residence unless a contrary intention can be deduced from
the contract.9
Generally, ownership is transferred when the parties intend it to be transferred and often the
intention of parties is deduced from the terms of the contract. The owner of goods may not be in
possession of the goods and the person in possession may not be the owner of the goods hence
the need to understand the principles of law guiding transfer of ownership.

Where there is a contract for the sale of unascertained goods, ownership of the goods is not
transferred to the buyer unless and until the goods are ascertained (identified).10
For specific or ascertained goods, where there is a contract for the sale of such goods, property in
the goods is transferred to the buyer when the parties intend it to be transferred and the intention
of the parties will be deduced from the terms of the contract, the conduct of the parties and the
circumstances of the case.11

Unless a different intention appears from the contract, the following rules will apply in
determining the intention of the parties as to the times at which property in the goods is to pass.

Rules on Passing of Ownership12

Rule 1: Where there is an unconditional contract for the sale of specific goods, in a
deliverable state, the property in the goods passes to the buyer when the contract is made and it is
immaterial whether the time of payment or the time of delivery, or both is postponed.

Dennant v Skinner and Collom

Tarling v Baxter

Rule 2: Where there is a contract for the sale of specific goods and the seller is bound to do
something to the goods, for the purpose of putting them into a deliverable state, the property does
not pass until such thing is done and the buyer has notice thereof.

Underwood Ltd v Burgh Castle Brick

Rule 3: Where there is a contract for the sale of specific goods in a deliverable state, but the seller
is bound to weigh, measure, test or do some other act or thing with reference to the goods for the
purpose of ascertaining the price, the property does not pass until such act or thing is done, and
the buyer has notice thereof.

Rule 4: When the goods are delivered to the buyer on approval or “on sale or return” or other
similar terms the property therein passes to the buyer –
(a) when he signifies his approval or acceptance to the seller or does any other act
adopting the transaction;
(b) if he does not signify his approval or acceptance to the seller but retains the goods
without giving notice of rejection, then, if a time has been fixed for the return of the
goods, on the expiration of such time, and, if no time has been fixed, on the
expiration of a reasonable time. What is a reasonable time is a question of fact.

Poole v Smith’s Car Sales (Balham) Ltd.

Rule 5: (1) Where there is a contract for the sale of unascertained or future goods by description,
and goods of that description and in a deliverable state are unconditionally appropriated to the
contract, either by the seller with the assent of the buyer, or by the buyer with the assent of the
seller, the property in the goods thereupon passes to the buyer. Such assent may be express or
implied, and may be given either before or after the appropriation is made.

Pignatario v Gilroy
Edwards v Ddin

(2) Where, in pursuance of the contract, the seller delivers the goods to the buyer or to a
carrier or other bailee or custodian (whether named by the buyer or not) for the purpose of

9
Section 29(1)
10
Section 17
11
Section 18
12
Section 19 rules 1-5
O.H Akinladejo, Lecturer, 3
School of Business Administration, UTech
transmission to the buyer, and does not reserve the right of disposal, he is deemed to have
unconditionally appropriated the goods to the contract.

Where there is a contract for the sale of specific goods or where goods are subsequently
appropriated to the contract, the seller may, by the terms of the contract or appropriation, reserve
the right of disposal of the goods until certain conditions are fulfilled. In such case,
notwithstanding the delivery of the goods to the buyer, or to a carrier or other bailee or custodian
for the purpose of transmission to the buyer, the property in the goods does not pass to the buyer
until the conditions imposed by the seller are fulfilled13.

Conditions and Warranties under the Sale of Goods Act

As stated earlier in previous unit, conditions are fundamental terms in any contract. A condition
goes to the root of a contract and breach thereof may lead to the termination of the contract at the
option of the aggrieved party in the contract. In addition, the aggrieved party may also be able to
recover damages. Warranties on the other hand are not fundamental terms in the contract.
Warranties are often referred to as lesser terms in the contract and a breach of warranty does not
give the aggrieved party the legal right to terminate the contract but to bring action to recover
damages.

It is important therefore in a situation of breach of terms in a sale of goods transaction to

establish whether the term breached is a condition or a warranty. It is also important to recognize
that the aggrieved party may choose not to enforce his right to terminate the contract even in a
situation of breach of condition. In essence the buyer may waive a condition or elect to treat the
breach of condition as a breach of warranty and not as a ground for termination of the contract.14
Parties are always free to specify which terms in sale of goods are conditions and which are
warranties. Whether a term of contract will be treated as a condition or a warranty depends in
each case on the construction of the contract and interpretation by the court in case of dispute.
The fact that a term is labeled ‘condition’ or ‘warranty’ in a contract does not automatically
mean that the court will interpret it as such.15 In cases of ambiguity, the court will have to decide
whether a term should be considered a warranty or a condition.

The Sale of Goods Act provides16 for implied conditions and warranties. The effect is that even
in situations where parties neglect to include these terms in their contract they will still be
applicable and the seller cannot generally impose a term on the buyer that will negate the effect
of these implied conditions and warranties.

Time of payment is not generally a condition unless contrary intention appears in the contract17.
Where contract is not severable and buyer has accepted goods or part of goods or where
contract is for specific goods and property has passed to buyer, breach of condition by seller
will be treated as breach of warranty unless contrary is expressed or can be implied from the
contract.

The Sale of Goods Act however provides that in every sale of goods the following implied terms
will apply:

1. Implied condition that the seller has title or that the seller has the right to sell the goods.18
Niblett v Confectioners’ Materials Co.
Rowland v Divall

2. Implied warranty that the buyer will have quiet possession of the goods and that the goods
will be free from any charge or encumbrace.19
Microbreads AG v Vinhurst Road Markings

13
Section 20
14
Section 12 (1)
15
Section 12(1)(b)
16
Sections 11-16
17
Section 11
18
Section 13(a)
19
Section 13(b) (c)
O.H Akinladejo, Lecturer, 4
School of Business Administration, UTech
3. Implied condition that the actual goods shall correspond with description of the goods given
at the time of contract. It is not sufficient that the bulk of the goods correspond with the
sample if the goods do not correspond with the description.20.
Grant v Australian Knitting Mills
Note - Sale by description:
• May apply to both specific and unascertained goods
• May apply when buyer has not seen the goods but is relying on description.
• May apply to goods specifically seen by the buyer at the time of sale which does not
correspond with description.
• May not apply when buyer relies upon his own judgement and not that of the seller.
Only words needed to identify the goods are part of the description.

4. Implied condition that the goods will fit the purpose for which it has been purchased in a
situation where the buyer informs the seller the purpose of purchase and the buyer relied on
the advice of the seller or his representative in making the purchase. Where the purpose has
not been expressly stated by the buyer but the goods purchased has only one use then it is
implied that the seller knows the purpose for which the buyer is buying and therefore the
implied condition may still apply.21
Godley v Perry
Implied condition of fitness for purpose applies only in the following circumstances:-
• Where the buyer expressly or by implication makes known to the seller the particular
purpose for which the goods are required AND
• The buyer relies on the seller’s skill or judgement AND
• The goods are of a description which it is in the course of seller’s business to supply.
Sale of a specified article under its patent or trade name has no implied condition of fitness
for purpose.
Note
• Where goods have only one particular purpose, the purpose for which the goods are
required is made known by implication.
• Where goods are suitable for more than one purpose, the particular purpose for which the
buyer requires them must be made known.
• If there are special circumstances connected with the use of the goods, these must be
made known by buyer.
• Whether goods are reasonably fit for their purpose is a question of fact e.g. second hand
vs. brand new goods.

5. Implied conditions that goods shall be of merchantable quality.22

Grant v Australian Knitting Mills
For this implied condition to apply, the following must be present:
• The goods must be bought by description from a seller who deals in goods of that
description
• If the buyer has examined the goods, there shall be no implied condition as regards
defects such examination ought to have revealed or if defect was drawn to buyer’s
attention
Factors that may affect quality of goods include:-
• appearance and finish
• freedom from minor defects
• safety
• durability
It is important to note however that merchantable quality is different from the quality expected
by the buyer. Merchantable quality is also based on the premise that the buyer will be using the
goods for normal purposes

6. Implied condition that the bulk shall correspond with the sample in quality; that the buyer
shall have reasonable opportunity of comparing the bulk with the sample and that the goods

20
Section 14
21
Section 15(a)
22
Section 15(b)
O.H Akinladejo, Lecturer, 5
School of Business Administration, UTech
 shall be free from any defect rendering them non-merchantable which would not be apparent
on reasonable examination of the sample.23 (Section 16)
Nichol v Godts

Manufacturers Liability for Defective Goods

For the buyer to bring an action against the seller for breach of implied condition there must be
privity of contract between the buyer and the seller. What happens when the buyer buys from a
seller who is not the manufacturer and the defect is as a result of negligence of the manufacturer?
Or what happens where the party that has suffered as a result of the defective product is not the
buyer? A party who has suffered loss whether or not he or she is the buyer can bring an action
against the manufacturer of the goods in tort for negligence. The action is not based on breach of
contract but on breach of duty in tort and therefore there is no need for privity of contract to be
established.
Donoghue v Stevenson

TRANSFER OF TITLE BY NON-OWNERS

Generally where seller does not have title to the goods and is not authorized by the owner, the
buyer acquires no better title to the goods than the seller had unless the owner of the goods is by
his conduct precluded from denying the sellers authority to sell. (Section 22(1))
However, there are circumstances when non-owner may transfer title to goods. These
circumstances are as follows:

1. When an apparent owner of goods dispose of them as if he were the true owner. – Section
22(2)(a) (Doctrine of Estoppel).

2. Sale by persons having special common law on statutory power of sale or under order of
a court of competent jurisdiction. – Section 22(2)(b).

3. Sale by person with voidable title whose title has not been avoided at the time of sale
provided and the buyer buys in faith and without notice of sellers defects of title. –
Section 23.

4. Sale by seller in possession after sale. – Section 25(1).

5. Sale by buyers in possession of goods or documents of title. – Section 25(2).

Performance of Sale of Goods Contract

Sale of goods contract is performed when the seller delivers and the buyer accepts delivery and
pays for the goods (duty of seller is to deliver and duty of buyer is to accept and pay). The seller
must be ready and willing to give permission of the goods to the buyer in exchange for the price
and the buyer must be ready and willing to pay the price in exchange for possession of the
goods.24
The rules on delivery in a sale of goods transaction are as follows:-

1. Whether the buyer has to take possession of the goods or the seller has to send them to
the buyer depends on the particular contract (express or implied term).

2. If there is no express or implied term, the place of delivery is the seller’s place of
business and if he has none, his residence.

3. Where the goods are in possession of a third party, there is no delivery to buyer unless the
third party acknowledges that he now holds the goods on buyer’s behalf.

4. The expense of putting the goods in a deliverable state is on the seller.

23
Section 16
24
See Sections 27-28
O.H Akinladejo, Lecturer, 6
School of Business Administration, UTech
 5. Where sellers delivers less quantity of goods than he contracted to sell, the buyer may
reject them or accept them or accept them at the contract rate.

6. Where seller delivers larger quantity of goods than he contracted to sell, the buyer may
accept the contracted quantity and reject the rest or he may reject the whole or he may
accept the whole at the contract rate.

7. Where seller delivers to the buyer the goods he contracted to sell mixed with mixed with
the goods of different description not included in the contract, buyer may accept the
goods in accordance with the contract and reject the rest or may reject the whole.

8. Buyer is not bound to accept installment deliveries unless agreed.

9. Where authorized or required by buyer in pursuance to the contract, delivery of goods to

carrier for purpose of transmission to buyer is generally deemed to be delivery to buyer.

10. If seller fails to make a reasonable contract with carrier on behalf of buyer and the goods
are damaged or lost in course of transit, the buyer may decline to treat delivery to carrier
as delivery to him.

11. Seller must give notice to buyer to insure on sea transit otherwise goods will be deemed
at his risk.

12. If seller agrees to deliver at his own risk, buyer must unless otherwise agreed take any
risk of deterioration in the goods necessarily incidental to the course of transit.

13. For goods not previously examined, there is no acceptance unless buyer is given a
reasonable opportunity to examine.

14. Buyer is deemed to have goods when:-

a. He intimates seller that he has accepted goods

b. He does any act in relation to the goods which is inconsistent with the rights of the
seller

c. After lapse of a reasonable time, he retains the goods without intimating seller that he
has rejected goods.

15. Unless otherwise agreed, if buyer rejects goods, he is not bound to return to seller but it is
sufficient if he intimates seller that he is rejecting the goods.

16. If the seller requests buyer to take delivery and buyer does not within a reasonable time,
buyer will be liable to seller for any loss resulting from the neglect or refusal and a
reasonable charge for care and custody of goods except buyer has repudiated the contract.

Breach of Sale of Goods Contract

Where there as been a breach of sale of goods transaction, the following remedies may be
available to the aggrieved party:

Remedies of the seller against the goods are25:

1. Lien on the goods or rights to retain them for the price.

2. In case of the insolvency of the buyer, a right of stopping the goods in transit after the
seller has parted with possession of the goods.

3. A limited right of resale.

25
See Sections 40-47
O.H Akinladejo, Lecturer, 7
School of Business Administration, UTech
 4. Right of withholding delivery

Note: 1 to 3 above applies when property in goods has passed to buyer and 4 applies when
property in goods has not passed to buyer.

Remedies of the seller against the buyer

1. Action for price against buyer when property in goods has passed to buyer or when property
has not passed but buyer agreed to pay on a certain date and he wrongfully neglects or
refuses to pay.26 .

2. Action against buyer for damages for non-acceptance of goods when buyer refuses or
neglects to accept delivery of goods.

Remedies of the buyer

1. Action by buyer against seller for non-delivery of goods.

2. Action for specific performance of contract (discretion of court).

3. Action for damages for breach of warranty.

LIST OF CASES

1. Barrow Lane and Ballard v Phillips

2. Niblett v Confectioners’ materialsa co.
3. Microbeads v Vinhurst Road Markings
4. Rowland v Divall
5. Grant v Australian Knitting Mills
6. Shine v General Guarantee Finance
7. Godley v Perry
8. Nichol v Godts
9. Healy v Howlett & sons
10. Tarling v Baxter
11. Dennant v Skinner & Collom
12. Underwood v Burgh Castle Brick and Cement Syndicate
13. Poole v Smith’s Car Sales (Balham) Ltd.
14. Pignatario v Gilroy
15. Edwards v Ddin
16. Donoghue v Stevenson

26
Section 48
O.H Akinladejo, Lecturer, 8
School of Business Administration, UTech
Tutorial Questions

1. Margaret is in the process of setting up a small restaurant in Montego Bay. On Monday, she
went to Furniture and Appliances Limited where she inspected ten pinewood tables and
matching chairs. She tells the sales assistant that she wanted to purchase the tables and chairs for
use in her restaurant which she would be opening soon. She however stated that for her to
purchase the tables and chairs they would have to be varnished for easy maintenance. The sales
assistant indicated that Furniture and Appliances Limited would need at least four days to
complete the varnishing. In order to ensure that she would not lose her chance to buy these
specific items of furniture, Margaret pays for the ten tables and chairs in cash. The sales
assistant told her that the furniture would be delivered in four days' time.

A day before the due date of delivery, Margaret received a call from Furniture and Appliances
Limited that six of the tables had been damaged in a fire accident at the store’s factory. He stated
that since ownership passed to Margaret with payment she would have to purchase replacement
tables for her restaurant. Margaret ordered six replacement tables.
Upon delivery, the six replacement tables collapsed under the weight of dishes. One of the chairs
also broke when Margaret sat on it.
Advise Margaret.

2. Jan visited 'Car Depot' limited where she saw two cars she liked on display. She inquired from
the manager whether the cars could be used for taxi services and the manager informed her that
that the car would be excellent. for commercial transportation. She was informed that she could
only get one of the cars when she paid because the second car on display was not to be sold. She
was however promised that immediately she paid, a staff of the company would drive the car
down to the office from another depot for her collection. She paid instantly for the two cars.
She collected the first car and on her way home the brakes failed and she had a head on collision
with another car which happened to be the second car she purchased. The driver of the second
car was coming from the depot when the accident occurred. Car Depot said they are not liable.
Advise Jan.

3. Superior Homes advertised complete Mahogany bedroom furniture at special price of $40,000
inclusive of installation in the Sunday newspaper. Betty visited the store based on the advert she
saw. Betty inspected the samples on display and selected two sets for delivery in 3 days.
Superior Homes telephoned Betty requesting that she should use her own transportation to
collect the vehicle because their truck broke down. She arranged her own transportation and
transported the furniture to her home only to discover that the furniture was made of some type
of cheap wood and not mahogany.
She has received a second call to collect the second set of furniture but she has refused. She
wants Superior Homes to take back the first set she collected, refund her transportation cost and
refund her money for the set she has refused to collect.
Advise Betty.

O.H Akinladejo, Lecturer, 9

School of Business Administration, UTech