Sale of Goods Act

This Act may be cited as the Sale of Goods Act.

Section 2 provides definitions of terms used in the Act (for example: “action”, “buyer”, “contract of sale”, “delivery”, “document of title to goods”, “fault”, “future goods”, “goods”, “plaintiff”, “property”, “quality of goods”, “sale”, “seller”, “specific goods”, and “warranty”) and includes deeming rules on good faith and insolvency.

The provision says the price may be fixed by contract or agreed method or determined by the parties' course of dealing; if not so determined the buyer must pay a reasonable price.

If a third party valuation fails and goods already delivered and appropriated by the buyer, the buyer must pay a reasonable price; if the third party is prevented from valuing due to the seller's or buyer's fault, the party not at fault may sue for damages.

Section 12(1) says that, unless the contract shows a different intention, stipulations as to time of payment are not deemed to be of the essence in a contract of sale; Section 12(2) says whether any other stipulation as to time is of the essence depends on the terms of the contract; Section 12(3) defines “month” in a contract of sale as prima facie calendar month.

Where a contract of sale is subject to any condition to be fulfilled by the seller, the buyer may waive the condition or may elect to treat the breach as a breach of warranty and claim damages instead of repudiating the contract; whether a stipulation is a condition or a warranty depends on construction of the contract; if the contract is not severable and the buyer has accepted the goods or property has passed, breaches of seller's conditions can only be treated as breaches of warranty (unless contract term to the contrary); and this section does not affect conditions or warranties excused by law.

The seller must have the right to sell the goods in a sale, and in an agreement to sell must have that right when ownership is to pass.

When goods are sold by description there is an implied condition that the goods correspond with that description; where the sale is by sample and description, it is insufficient that the bulk matches the sample if the goods do not also match the description.

If a buyer makes known the particular purpose and the seller normally supplies goods of that description, there is an implied condition that the goods will be reasonably fit for that purpose.

A "contract of sale by sample" is one that contains a term, express or implied, stating it is a sale by sample.

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

If necessaries are sold and delivered to an infant, minor, or a person incompetent to contract by reason of mental incapacity or drunkenness, that person must pay a reasonable price for them.

A contract of sale may be made in writing (with or without seal), by word of mouth, partly in writing and partly orally, or may be implied from the conduct of the parties.

A sale contract for goods worth two hundred shillings or more is not enforceable by action unless the buyer accepts or actually receives part of the goods, gives something in earnest or part payment, or there is a written note or memorandum signed by the party to be charged or that party's agent.

Goods that are the subject of a contract of sale may be either existing goods (owned or possessed by the seller) or goods to be manufactured or acquired by the seller after the contract; a contract purporting to sell future goods operates as an agreement to sell.

If specific goods contracted for sale have perished without the seller's knowledge at the time the contract is made, the contract is void.

If specific goods agreed to be sold perish without fault before the risk passes to the buyer, the sale agreement is avoided.

Property in unascertained goods does not transfer to the buyer until the goods are ascertained.

Property in specific or ascertained goods passes to the buyer when the parties to the contract intend it to pass.

When there is an unconditional contract for the sale of specific deliverable goods, ownership of the goods passes to the buyer at the time the contract is made.

The seller may reserve the right to dispose of specific goods until conditions set by the seller are fulfilled; a buyer must return the bill of lading if he does not honour a bill of exchange.

If delivery is delayed through the fault of either buyer or seller, the goods are at the risk of the party at fault for losses that would not have occurred but for that fault.

A buyer does not obtain a better title to goods than the seller had, unless the owner is by conduct precluded from denying the seller’s authority to sell.

If a buyer purchases goods in good faith and without notice while the seller's voidable title has not yet been avoided, the buyer acquires a good title to those goods.

When goods have been stolen and the offender is convicted, ownership of the stolen goods revests in the person who was the owner of the goods or that person's personal representative.

Resale of goods in certain cases

When a writ of execution is delivered to the sheriff, the sheriff must (without fee) endorse on the back of the writ the hour, day, month and year of receipt.

The seller must deliver the goods; the buyer must accept and pay for them in accordance with the contract of sale.

Unless otherwise agreed, delivery of the goods and payment of the price are concurrent conditions: the seller must be ready and willing to give possession 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.

Rules for delivery: who must send or take possession of sold goods, where delivery occurs by default, seller's obligation to send within a reasonable time when required, third-person acknowledgement before delivery, reasonable hours for tender, and seller bearing costs to prepare goods unless agreed otherwise.

If the buyer accepts delivered goods that are of wrong quantity or mixed with different goods, the buyer must pay for accepted goods at the contract rate; the buyer may reject or accept in specified ways.

Unless otherwise agreed, the buyer of goods is not bound to accept delivery by instalments.

If the seller is authorised or required to send goods to the buyer, delivery to the carrier is prima facie treated as delivery to the buyer; the seller must (unless authorised otherwise) contract with the carrier on the buyer’s behalf reasonably, and the buyer may refuse to treat delivery as his or hold the seller liable if the seller omits to do so and loss or damage occurs; for sea transit the seller must notify the buyer so the buyer can insure, otherwise goods are at the seller's risk during sea transit.

If the seller agrees to deliver goods at his own risk to a place other than where they are sold, the buyer must (unless otherwise agreed) bear the risk of deterioration during transit.

If goods are delivered which the buyer has not previously examined, the buyer is not treated as having accepted them until he has had a reasonable opportunity to examine them; and unless otherwise agreed the seller must, on request, give the buyer a reasonable opportunity to examine the goods.

The buyer is treated as having accepted the goods when he notifies the seller of acceptance, or when the goods are delivered and he acts inconsistently with the seller's ownership, or when he keeps the goods after a reasonable time without notifying rejection.

If a buyer lawfully refuses to accept delivered goods, the buyer does not have to return the rejected goods; instead, notifying the seller of the refusal is sufficient.

If the seller is ready and asks the buyer to take delivery but the buyer does not within a reasonable time, the buyer is liable to the seller for any loss from that neglect or refusal and for a reasonable charge for care and custody of the goods.

Defines when a seller is an "unpaid seller" and states who counts as a "seller" in this Part.

Sets out rights of the unpaid seller: a lien or right to retain the goods while in possession; stopping the goods in transitu on buyer insolvency; a right of resale subject to the Act; and a right to withhold delivery where property has not passed.

The seller has a lien on the goods in three specified cases; the seller may exercise that lien even if in possession of the goods as agent, bailee or custodier.

An unpaid seller may exercise a lien or right of retention over the remaining goods after part delivery, unless the part delivery shows an agreement to waive that lien.

A lien ends when the seller delivers the goods to a carrier for transmission to the buyer without reserving disposal rights; when the buyer or his agent lawfully obtains possession; or by waiver.

If the buyer becomes insolvent, an unpaid seller who has parted with possession may stop the goods in transit and resume or retain possession until payment or tender of the price.

Goods are treated as 'in transit' from delivery to a carrier, bailee or custodier for transmission to the buyer until the buyer or the buyer’s agent takes delivery; several clauses define when transit ends or continues (including early receipt, acknowledgement by carrier, rejection by buyer, delivery to a ship chartered by buyer, and part deliveries).

The unpaid seller may stop goods in transit either by taking possession or giving notice; if the seller gives notice to the carrier or bailee they must redeliver the goods to the seller and the seller must bear the redelivery expenses.

The unpaid seller's right of lien, retention or stoppage in transitu is not affected by any resale or other disposition by the buyer, unless the seller has assented; special rules defeat or limit that right when documents of title have been transferred in good faith for value.

Section 48 preserves the contract of sale when an unpaid seller exercises lien, retention or stoppage in transitu; if such an unpaid seller resells the goods the resale buyer obtains good title; the unpaid seller may resell perishable goods or where notice has been given and the buyer fails to pay within a reasonable time and recover damages; where the seller reserved a right of resale and resells after buyer's default the original contract is rescinded but the seller may still claim damages.

If the buyer wrongfully neglects or refuses to pay, the seller may sue for the price when ownership has passed; alternatively, if the price is due on a fixed day the seller may sue even if property has not passed.

If the buyer wrongfully refuses to accept and pay for goods, the seller may sue for damages for non-acceptance.

A buyer may sue the seller for damages if the seller wrongfully neglects or refuses to deliver the goods.

The court may, on the plaintiff's application, order specific performance of a contract for specific or ascertained goods and may make the decree unconditional or subject to terms; the plaintiff may apply at any time before judgment.

A buyer is not entitled, solely because of a breach of warranty, to reject the goods; damages are measured by the estimated direct and natural loss from the breach; for quality breaches the prima facie loss is the difference in value; setting off price does not prevent the buyer suing if further damage was suffered.

The buyer or the seller may recover interest or special damages when recoverable by law, and may recover money paid if the consideration for the payment has failed.

Where a right, duty or liability would arise under a contract of sale by implication of law, that implied right, duty or liability may be negatived or varied by express agreement, by the course of dealing between the parties, or by usage that binds both parties to the contract.

A reference to 'reasonable time' is to be decided as a question of fact.

Declared rights, duties or liabilities under this Act may be enforced by action unless the Act provides otherwise.

Section 58 sets rules for auction sales: lots are treated as separate contracts; an auction sale is complete when the auctioneer announces it; sellers generally must not bid unless a right to bid is notified; reserved prices and rights to bid may be used; if a right to bid is expressly reserved the seller or an authorised person may bid.

Preserves pre-existing bankruptcy and common-law rules for sales and states that the Act does not affect enactments about bills of sale; sale provisions do not apply to transactions intended as security (mortgage, pledge, charge or other security).