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FORMATION OF THE CONTRACT OF THE SALE OF GOODS


A contract for the Sale of Goods is formed according to the ordinary principles of the Common Law that is to say by offer and acceptance.

Section 3. Of the Sale of Goods Act
3.         (1)       A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a money consideration, called the price.”
(2)          There may be a contract of sale between one part owner and another.
(3)          A contract of Sale may be absolute or conditional.
(4)          Where under a contract of sale the property in the goods is transferred from the seller to the buyer, the contract is called a sale; but where the transfer of the property in the goods is to take place at a future time or subject to some condition thereafter to be fulfilled, the contract is called an agreement to sell.
(5)          An agreement to sell becomes a sale when the time elapses or the conditions are fulfilled subject to which the property in the goods is to be transferred.
Section 4.      (1)       Capacity to buy and sell is regulated by the general law concerning capacity to contract, and to transfer and acquire property;
Provided that, where necessaries are sold and delivered to an infant or minor, or to a person who by reason of mental incapacity or drunkenness is incompetent to contract, he must pay a reasonable price therefore.

 


SUBJECT MATTER OF THE CONTRACT:

The term ‘goods’ is defined by The Sale of Goods Act to include all chattels personal other than things in action and money, and all 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.

The definition is extensive but there are nevertheless things, which do not or may not fall within this definition.  The definition excludes non-physical items, such as company shares, which are technically ‘things in action’ or incorporeal movables and so are excluded by the plain words of the definition.  Similarly, items of ‘intellectual property’ such as copyrights, patents and trademarks are not ‘personal chattels’ or corporeal movables and so fall outside the definition, although of course goods may exist which embody these intellectual property rights.


NUMBER OF PARTIES IN A SALE OF GOODS CONTRACT


For a transfer of property in the goods to occur there must be at least 2 distinct parties.  The transfer implies necessity for more than 1 distinct person.  There must be a seller and a buyer.

A person cannot buy one’s own property or goods.  If one by mistake buys his own goods, he can recover the price paid on the grounds of total failure of consideration.  The seller and buyer must be two different legal entities.

Although the Act contemplates two distinct parties to the contract, namely a buyer and a seller, it does not follow that the buyer cannot already be the owner of the goods, for the seller may be a person having legal authority to sell them, for example a sheriff acting in execution of a writ of execution.  However, if a person contracts to buy his own goods from someone else under the mistaken impression that the goods belong to the seller, it seems clear that he can recover any price paid on the ground of total failure of consideration.

 
 
 

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