The Law Relating To Sales of Goods

Moshi Co-operative University
From the SelectedWorks of MWAKISIKI MWAKISIKI
Summer October 9, 2017
THE LAW RELATING TO SALES OF

GOODS IN TANZANIA
MWAKISIKI MWAKISIKI, Moshi Co-operative University
This work is licensed under a Creative Commons CC_BY International License.
Available at: https://works.bepress.com/mwakisiki-
mwakisiki/12/
The law relating to Sales of Goods-Moshi Co-operative University-LLB (2017/18)
MOSHI CO-OPERATIVE UNIVERSITY

(MoCU)
FACULTY OF LAW
THE LAW RELATING TO SALES OF GOODS

A STUDENT TRAINING MANUAL

PREPAIRED
BY
Tsar MWAKISIKI
EDWARDS
MWAKISIKI

Mwakisiki M.E., (2017). The law relating to Sales of Goods: A student Training Manual. Moshi
Co-operative University: Moshi
https://works.bepress.com/mwakisiki-mwakisiki/#
Prepared by Tsar MWAKISIKI MWAKISIKI EDWARDS - 1 -

INTRODUCTION
The sale of goods is the most common of all commercial contracts. The law relating to it
is contained in the Sale of Goods Act [Cap 214 R.E 2002] hereunder referred to as SOGA.
The contract of sale of goods is subject to the general legal principles applicable to all
contracts, such as offer and its acceptance, the capacity of parties, free and voluntary
consent, consideration and legality of the object.
The Sale of Goods Act1 as the law which governs the sale of goods contracts has laid down
certain terms which intend to protect a party to the contract as well as rules of general
application where the parties fail to provide for contingencies which may interrupt the
smooth performance of the contract2.
A CONTRACT OF SALE OF GOODS
Contract of sale of Goods is the contract where by the seller transfers or agrees to transfer
the property in goods to the buyer for money consideration called price 3. Under a contract
of sale, the property in the goods is transferred from the seller to the buyer.
Where the property in the goods is immediately transferred from the seller to the buyer at
the time of making the contract the contract is contract of sale. It is also called executed
contract. Where the transfer of property in goods is to take place in the future time or
subject to a condition to be fulfilled thereafter then the contract is an agreement to sale. It
is also known as executory contract as provided under Section 3 (3) of the Sale of Goods
Act4.
An agreement to sale become a sale when the time elapses, or the conditions are fulfilled,
subject to which the property in the goods is to be transferred. The following are thus the
essentials of a contract of sale of goods:
ESSENTIAL ELEMENTS OF A CONTRACT OF SALE
Contract of sale is first and foremost the contract that is consensual transaction based on
an agreement to bay and an agreement to sale 5. The provision of section 3( 1) of the law of
1
[Cap 214 R.E 2002]
2
www.lawteacher.net retrieved on Thursday 10th January 2017 at 12:34 pm
3
Section 3 of [Cap214 R.E 2002]
4
ibid
5
Psatiyah, I.S (1982). The sales of goods, (6th Ed). GB publishers: London

sales of goods Act6, defines a contract of sale as when the seller agrees to transfer the
property in goods that is ownership to the buyer for a consideration called price.
Consideration (price), this is the most essential element of ingredient of any contract of
sale. The provision of section 25 of the law of contract Act 7, place an emphasis that any
agreement without a consideration is null and void abi initio. The term consideration was
defined in the case of Thomas v Thomas8, to mean anything that is of value in the eyes of
the law.
Price as an essential element of the contract of sale is provided under section 10 and 11 of
the law of sales of good Act9, Where the wording of these sections are to the effect that the
price in a contract for sale of goods may be fixed by the contract or may be determined by
the course of dealing between the parties. In the absence of either of these, the buyer must
pay a reasonable price, the amount of which will be determined by the circumstances of
each particular case.
However, there some authority that, once the price is not fixed by the contract itself it will
be a concluding remark that no agreement was reached or contract was concluded as it was
held in the following cases:-
May and Butcher v The King 10, in this case May & Butcher wanted to buy surplus tentage
from the Disposals Board. In June of 1921, the Board defined terms of agreement, the
Board agrees to sell (and May & Butcher agree to purchase) all old tents and the price and
dates on which payment will be made shall be agreed on by the parties as the tents become
available. An agreement contained the provision price and date of payment shall be agreed
upon from time to time. It was held that an agreement between two parties to enter into an
agreement in which some critical part of the contract matter is left undetermined is no
contract at all.
Transfer of property in goods, the term property in goods means the ownership of the
goods. In every contract of sale, there should be an agreement between the buyer and the
seller for transfer of ownership 11. Thus, in a contract of sale there must be an absolute
6
[Cap 214 R.E 2002]
7
[Cap 345 R.E 2002]
8
[1842] 2 QB 851; 114 E.R. 330
9
[Cap 214 R.E 2002]
10
[1934] 2 KB 17-21
11
Bridge, M (1998). The sales of goods. Oxford University Press: London at pg 30

transfer of the ownership. It must be noted that the physical delivery of goods is not
essential for transferring the ownership.
Parties to contract of sale, To make a contract of sale there must be at least two parties.
These parties must be distinct, that is, a buyer and a seller. These parties should be also
competent to make a contact as per section 11(1) and (2) of the law of contract Act 12. In
this context the word buyer means any person who buys or agrees to buy the goods and
the word seller means any person who sells or agrees to sell the goods as per section
2(1) of the law of sales of goods Act 13.
The parties to the contract of sale they must be competent to contract, and every person
who is of the age of majority, of sound mind and being not disqualified by any law from
contracting can enter into a contract of sale as per section 11(1) of law of contract Act 14.
The effect of entering of a contract of sales with a person who is incompetent to contract
render such contract void as per section 11(2) of the law of contract Act 15. For example
undischarged bankrupt is precluded by the Bankrupt Act 16, under section 3 to enter into
contract.
Subject matter of a contract of sale (goods), there must goods in any contract of sale
which are the main subject of such contract, without which the contract cannot be made as
there will be nothing to sale. The provision of Section 2(1) of the law of sales of goods
Act17 defines the term good to include all personal chattels that are tangible and being
capable of being moved, and the provision exclude all emblements (growing crops
produced annually), money and things that are permanently affixed or attached to the land
such as the land, trees and houses. The goods which form the subject of a contract of sale
may be either existing ot future goods as it was explained above.
Essential elements of a valid contract, finally all the essential elements of a valid contract
must be present. The provision of section 10 of the law of contract Act18, enumerate some
of these essential element where among other things there must be a lawful consideration,
12
[Cap 345 R.E 2002]
13
[Cap 214 R.E 2002]
14
[Cap 345 R.E 2002]
15
[Cap 345 R.E 2002]
16
[Cap 25 R.E 2002]
17
[Cap 214 R.E 2002]
18[Cap 345 R.E 2002]

lawful object, consent of the parties and party must have capacity to enter into a contact of
sale.
Generally, any contract of sale must have the aforementioned element, and despite all that
also any contract of sale must satisfy the essential element of valid contract as set out under
section 10 of the law of contract Act so as to create some legal rights and duties thereto.
NB: See Section 5-6 of SOGA
Distinction between Contract of sale and Agreement to Sell
The following points will bring out the distinction between sale and an agreement to
sell:
(a) In a sale, the property in the goods sold passes to the buyer at the time of contract so
that he becomes the owner of the goods. In an agreement to sell, the ownership does not
pass to the buyer at the time of the contract, but it passes only when it becomes sale on the
expiry of certain time or the fulfilment of some conditions subject to which the property in
the goods is to be transferred.
(b) An agreement to sell is an executory contract, a sale is an executed contract.
(c) An agreement to sell is a contract pure and simple, but a sale is contract plus
conveyance.
(d) If there is an agreement to sell and the goods are destroyed by accident, the loss falls
on the seller. In a sale, the loss falls on the buyer, even though the goods are with the seller.
(e) If there is an agreement to sell and the seller commits a breach, the buyer has only a
personal remedy against the seller, namely, a claim for damages. But if there has been a
sale, and the seller commits a breach by refusing to deliver the goods, the buyer has not
only a personal remedy against him but also the other remedies which an owner has in
respect of goods themselves such as a suit for conversion or detinue, etc.
Distinctions between contract of sale and Bailment
A "bailment" is a transaction under which goods are delivered by one person (the bailor)
to another (the bailee) for some purpose, upon a contract that they be returned or disposed
of as directed after the purpose is accomplished (Section of Cap 345).
The property in the goods is not intended to and does not pass on delivery though it may
sometimes be the intention of the parties that it should pass in due course. But where goods

are delivered to another on terms which indicate that the property is to pass at once the
contract must be one of sale and not bailment.
Distinctions between contract of Sale and Hire Purchase Agreement
"Sale", is a contract by which property in goods passes from the seller fb the buyer for a
price. A "hire purchase agreement' is basically a contract of hire, but in addition, it gives
the hirer an option to purchase the goods at the end of the hiring period.
Consequently, until the final payment, the hirer is merely a Bailee of goods and ownership
remains vested in the bailor. Under such a contract, the owner of goods delivers the goods
to person who agrees to pay certain stipulated periodical payments as hire charges.
Though the possession is with the hirer, the ownership of the goods remains with the
original owner. The essence of hire purchase agreement is that there is no agreement to
buy, but only an option is given to the hirer to buy by paying all the instalments or put an
end to the hiring and return the goods to the owner, at any time before the exercise of the
option.
Since the hirer does not become owner of the goods until he has exercised his option to
buy, he cannot pass any title even to an innocent and bona fide purchaser.
The transaction of hire-purchase protects the owner of the goods against the insolvency of
the buyer, for if the buyer becomes insolvent or fails to pay the instalments, he can take
back the goods, as owner. And if the hirer declines to take delivery of the goods, the remedy
of the owner will be in damages for non-hiring and not for rent for the period agreed.
It is important to note the difference between a hire purchase agreement and mere payment
of the price by instalments, because the latter is a sale, only the payment of price is to be
made by instalments.
The distinction between the two is very important because, in a hire-purchase agreement
the risk of loss or deterioration of the goods hired lies with the owner and the hirer will be
absolved of any responsibility therefore, if he has taken reasonable care to protect the same
as a bailee. But it is otherwise in the case of a sale where the price is to be paid in
instalments.

SUBJECT MATTER OF A CONTRACT OF SALE

MEANING OF GOODS
The subject matter of the contract of sale is essentially goods. Goods are tangible or
movable personal property other than money or things that have value whether tangible or
not19. Section 2(1) of the law of sales of goods Act 20, defines the term good to include all
personal chattels that are tangible and being capable of being moved, and the provision
exclude all emblements (growing crops produced annually), money and things that are
permanently affixed or attached to the land such as the land, trees and houses.
The united nation convention on contract for the international sales of goods 21, defines
the term goods to exclude among other things goods bought for personal, family or
household use, things bought by auction, stocks, shares, investment securities, negotiable
instruments or money and ships, vessels, hovercraft or aircraft just to mention a few.
In economic terms, a good is a material that satisfies human wants and provides utility, for
example, to a consumer making a purchase while getting an enough-satisfying product22.
The case of Mills v Stokman23, draws a distinction of what are goods and what are not
goods, and according to this case a quantity of state which had been quarried and then left
on some land as waste material for many years was held to be part of the land. Things like
goodwill, copyright, trademark, patents, water, gas, electricity are all goods.
In the case of Commissioner of Sales Tax v Madhya Pradesh Electricity Board 24, the
Supreme Court observed that electricity can be transmitted, transferred, delivered, stored,
possessed, in the same way as any other movable property. If there can be sale and purchase
of electric energy like any other movable object, we see no difficulty in holding that electric
energy was intended to be covered by the definition of goods.
Generally, the term goods can be defined to include all things that are capable of being
moved from one place to another, being tangible, and those which can satisfy the human
needs and normally people make effort to acquire them.
19
Blacks Law Dictionary 9 th Edition.
20
[Cap 214 R.E 2002]
21
Article 2 of the united nation convention on contract for the international sales of goods
22
http://www.szczepankiewicz.net/microeconomics.pdf Retrieved on Thursday 5th January 2017 at 16:19HRS
23
[1967] HCA 15; 116 CLR 61
24 [AIR 1970 SC 732]

CLASSIFICATION OF GOODS
Goods may be (a) existing, (b) future, or (c) contingent. The existing goods may be (i)
specific or generic, (ii) ascertained or unascertained.
As far as goods are concerned they can be categorized into two major forms that is existing
goods which includes all goods that are in possession of the seller and which have been
agreed upon by the parties at the time of making a contract of sale where as the future
goods are those that are not yet in possession of the seller but such goods will be available
after making a contact of sale that is in future date as per section 7(1) of the law of sales of
goods Act25.
The existing goods may be either specific goods or ascertained goods that is are goods that
have been identified at the time of making a contract of sale, where as future goods can
either be unascertained or contingent goods. Unascertained goods (Generic) are those
which have not yet identified at the time of making a contract of sale where as contingent
goods are those which their availability depend upon occurrence or non-occurrence of
certain event as defined under section 7(2) 26.
SALES OF PERISHABLE GOODS
Effect of Perishing of Goods (Section 8 & 9 of SOGA)
In a contract of sale of goods, the goods may perish before sale is complete. Such a stage
may arise in the following cases:
(i) Goods perishing before making a contract
Where in a contract of sale of specific goods, the goods without the knowledge of the seller
have, at the time of making the contract perished or become so damaged as no longer to
their description in the contract, the contract is void. This is based on the rule that mutual
mistake of fact essential to the contract renders the contract void. (Section 8)
If the seller was aware of the destruction and still entered into the contract, he is estopped
from disputing the contract. Moreover, perishing of goods not only includes loss by theft
but also where the goods have lost their commercial value.
25
[Cap 214 R.E 2002]
26
Sales of Goods Act [Cap 214 R.E 2002]

(ii) Goods perishing after agreement to sell
Where there is an agreement to sell specific goods and subsequently, the goods without any
fault of any party perish or are so damaged as no longer to answer to their description in
the agreement before the risk passes to the buyer, the agreement is thereby avoided.
The provision applies only to sale of specific goods. If the sale is of unascertained goods.
the perishing of the whole quantity of such goods in the possession of the seller will not
relieve him of his obligation to deliver. (Section 9).
MODE OF FIXING PRICE (S. 10-11 of SOGA)
Price is the consideration for a contract of sale that must be paid in form of money fixed
by parties or by third parties when parties agree the same. If no money is involved and
parties exchange goods of equal value it becomes barter trade. But when goods are sold
partly for goods and partly for money, the contract becomes one of sale.
Therefore no valid sale can take place without a price. The price should be paid or promised
to be paid in legal tender money, unless otherwise agreed, that is to say it may be paid in
the form of a cheque, bank deposit and many other forms.
The price may be fixed: (i) at the time of contract by the parties themselves, or (ii) may
be left to be determined by the course of dealings between the parties, or (iii) may be left
to be fixed in some way stipulated in the contract, or (iv) may be left to be fixed by some
third-party.
Where the contract states that the price is to be fixed by a third-party and he fails to do so,
the contract is void. But if the buyer has already taken the benefit of the goods, he must
pay a reasonable price for them. If the third-party's failure to fix the price is due to the fault
of one of the parties, then that party is liable for an action for damages.
Where nothing is said by the parties regarding price, the buyer must pay a reasonable price,
and the market price would be a reasonable price.
In Hoadly v Mclaine27 it was said that when price is not fixed, the buyer must pay a
reasonable price. This was also stated in Clarke v Westrope.28.
27
(1854) 118 ER 1304
28
(1856) 139 ER 1572

In Milnes v Gery29 where the defendant contracted to purchase at a price to be ascertained

in a specific mode, and no price was fixed in the mode, it was held that as price is of essence
of a contract of sale, there could be no concluded contract, which the court could enforce.
However consideration could be partly payable in money and partly in goods as it was said
in Aldridge v Johnson. 30 Nevertheless the price in a contract of sale may be fixed by the
contract or may be left to be fixed in a manner thereby agreed or may be determined by the
course of dealing between the parties
Read also the case of May & Butcher v. The king [1934] 2 KB 17
TERMS OF A CONTRACT OF SALE
Conditions and Warranties
The parties are at liberty to enter into a contract with any terms they please. As a rule, before
a contract of sale is concluded, certain statements are made by the parties to each other. The
statement may amount to a stipulation, forming part of the contract or a mere expression of
opinion which is not part of the contract.
If it is a statement by the seller on the reliance of which the buyer makes the contract, it
will amount to a stipulation. If it is a mere commendation by the seller of his goods it does
not amount to a stipulation and does not give the right of action. .
The stipulation may either be a condition or a warranty. Section 12 & 13 (2) of SOGA
draws a clear distinction between a condition and a warranty. Whether a stipulation is a
condition or only a warranty is a matter of substance rather than the form of the words used.
A stipulation may be a condition though called a warranty and vice versa.
Conditions
If the stipulation forms the very basis of the contract or is essential to the main purpose of
the contract. it is a condition. The breach of the condition gives the aggrieved party a right
to treat the contract as repudiated.
Thus, if the seller fails to fulfil a condition, the buyer may treat the contract as repudiated,
29
(1807) 33 ER 574
30
[1857] 7 E & B 385
Prepared by Tsar MWAKISIKI MWAKISIKI EDWARDS- 10 -

refuse the goods and. if he has already paid for them, recover the price. He can also claim
damages for the breach of contract.(Section 13 (2) of SOGA).
Warranties
If the stipulation is collateral to the main purpose of the contract, i.e.. is a subsidiary
promise, it is a warranty. The effect of a breach of a warranty is that the aggrieved party
cannot repudiate the contract but can only claim damages. Thus, if the seller does not fulfil
a warranty. the buyer must accept the goods and claim damages for breach of warranty.
Section 12 of SOGA states that the stipulation as to time of payment are not to be deemed
conditions (and hence not to be of the essence of a contract of sale) unless such an intention
appears from the contract. Whether any other stipulation as to time (e.g., time of delivery)
is the essence of the contract or not depends on the terms of the contract.
Circumstances where a condition may be treated as warranty
In some cases a condition sinks or descends to the level of a warranty. The first two cases
depend upon the will of the buyer but the third is compulsory and acts as estoppel against
him.
(a) A condition will become a warranty where the buyer waives the condition, or (b) A
condition will sink to the level of a warranty where the buyer treats the breach of condition
as a breach of warranty; or (c) Where the contract is indivisible and the buyer has accepted
the goods or part thereof. the breach of condition can only be treated as breach of warranty:
The buyer can only claim damages and cannot reject the goods or treat the contract as
repudiated.
Sometimes the seller may be excused by law from fulfilling any condition or warranty and
the buyer will not then have a remedy in damages (See Section 13 (1)-(4) of SOGA).
CATEGORIES OF CONDITIONS/WARRANTIES
Implied Warranties/Conditions
Conditions and warranties may be express or implied. Express conditions and warranties
are which, are expressly provided in the contract. Implied conditions and warranties are

those which are implied by law or custom; these shall prevail in a contract of sale unless
the parties agree to the contrary.
Even where no definite representations have been made, the law implies certain
representations as having been made which may be warranties or conditions. An express
warranty or condition does not negative an implied warranty or condition unless
inconsistent therewith.
There are two implied warranties: Implied Warranties [Section 14(b), 14(c)]. Implied
warranties are those which the law presumes to have been incorporated in the contract of
sale inspite of the fact that the parties have not expressly included them in a contract of sale.
Subject to the contract to the contrary, the following are the implied
(a) Implied warranty of quiet possession: If the circumstances of the contract are such
as there is an implied warranty that the buyer shall have and enjoy quiet possession of the
goods.
(b) Implied warranty against encumbrances: There is a further warranty that the goods
are not subject to any right in favour of a third-party, or the buyer's possession shall not be
disturbed by reason of the existence of encumbrances.
This means that if the buyer is required to, and does discharge the amount of the
encumbrance, there is breach of warranty, and he is entitled to claim damages from the
seller.
Implied Conditions [Sections 14(a),) and Proviso 16(a), and Proviso 16(b). Different
implied conditions apply under different types of contracts of sale of goods, such as sale by
description, or sale by sample, or sale by description as well as sample. The condition, as
to title to goods applies to all types of contracts, subject to that there is apparently no other
intention.
Implied Conditions as to title
There is an implied condition that the seller, in an actual sale, has the right to sell the goods,
and, in an agreement to sell, he will have to it when property is to pass. As a result, if the
title of the seller turns out to be defective, the buyer is entitled to reject the goods and can

recover the full price paid by him.
In Rowland v. Divali (1923) 2 K.B., 'A' had bought a second hand motor car from 'B' and
paid for it. After he had used it for six months, he was deprived of it because the seller had
no title to it. It was held that 'A' could recover the full price from 'B' even though he had
used the car for six months, as the consideration had totally failed.
Implied conditions under a sale by description
In a sale by description there are the following implied conditions:
(a) Goods must correspond with description: Under Section 15, when there is a sale of
goods by description, there is an implied condition that the goods shall correspond with
description.
In a sale by description, the buyer relies for his information on the description of the goods
given by the seller, e.g. in the contract or in the preliminary negotiations.
Where 'A' buys goods which he has not seen, it must be sale by description, e.g., where he
buys a 'new Fiat car' from 'B' and the car is not new, he can reject the car. Even if the buyer
has seen the goods, the goods must be in accordance with the description (See the case of
Beale v. Taylor (1967) All E.R. 253 & Mussa Mahaba v Rukia Shamte [1979] LRT 6).
(b) Goods must also be of merchantable quality: If they are bought by description from
dealer of goods of that description. [Section 16 (b)].
Merchantable quality, means that the goods must be such as would be acceptable to a
reasonable person, having regard to prevailing conditions. They are not merchantable if
they have defects which make them unfit for ordinary use, or are such that a reasonable
person knowing of their condition would not buy them.
'P' bought black yarn from' '0' and, when delivered, found it damaged by the white ants.
The condition of merchantability was broken.
But, if the buyer has examined the goods, there is no implied condition as regards defects
which such examination ought to have revealed. If, however, examination by the buyer
does not reveal the defect, and he approves and accepts the goods, but when put to work,
the goods are found to be defective, there is a breach of condition of merchantable quality.

The buyer is given a right to examine the goods before accepting them. But a mere
opportunity without an actual examination, however, cursory, would not suffice to deprive
him of this right.
(c) Condition as to wholesomeness: The provisions, (i.e., eatables) supplied must not only
answer the description, but they must also be merchantable and wholesome or sound. 'F'
bought milk from 'A' and the milk contained typhoid. germs. 'F's wife became infected and
died. 'A' was liable for damages. Again, 'C' bought a bun at 'M's bakery, and broke one of
his teeth by biting on a stone present in the bun. 'M' was held liable.
(d) Condition as to fitness for a particular purpose: Ordinarily, in a contract of sale,

there is no implied warranty or condition as to the quality of fitness for any particular
purpose of goods supplied. (See section 16 (c) of SOGA).
But there is an implied condition that the goods are reasonably fit for the purpose for which
they are required if: (i) the buyer expressly or impliedly makes known the intended purpose,
so as to show that he relies on the seller's skill and judgement, and (ii) the goods are of
a description which it is in the course of the seller's business to supply (whether he be the
manufacturer or not). There is no such condition if the goods are bought under a patent or
trade name.
In Priest v. Last (1903) 2 K.B. 148, a hot water bottle was bought by the plaintiff, a draper,
who could not be expected to have special skill knowledge with regard to hot water bottles,
from a chemist, who sold such articles. While being used by the plaintiffs wife, the bottle
bursted and injured her. Held, the seller was responsible for damages.
In Grant v. Australian Knitting Mills (1936) 70 MLJ 513, 'G' purchased woolen
underpants from 'M' a retailer whose business was to sell goods of that description. After
wearing the underpants, G developed some skin diseases. Held, the goods were not fit for
their only use and 'G' was entitled to avoid the contract and claim damages.
Implied Condition as to sale by sample (Section 17 of SOGA)
(a) there is an implied condition that the bulk shall correspond with the sample in quality;
(b) there is another implied condition that the buyer shall have a reasonable opportunity of
comparing the bulk with the sample; (c) it is further an implied condition of

merchantability, as regards latent or hidden defects in the goods which would not be
apparent on reasonable examination of the sample.
In a sale by sample as well as by description, the goods supplied must correspond both
with the samples as well as with the description. Thus, in Nichol v. Godis (1854) 158 E.R.
426, there was a sale of "foreign refined rape-oil having warranty only equal to sample".
The oil tendered was the same as the sample, but it was not "foreign refined rape-oil" having
a mixture of it and other oil. It was held that the seller was liable, and the buyer could refuse
to accept.
Read: Hartley V. Hyman (1920) 3K.B 475 & Timber furniture Agency V. Dodoma District
Council. Civ.Case No. 13 OF 1989 (HC) Dodoma (Unreported).
THE DOCTRINE OF CAVEAT EMPTOR
The term caveat emptor is a Latin word which means "let the buyer beware". This
principle states that it is for the buyer to satisfy himself that the goods which he is
purchasing are of the quality which he requires. If he buys goods for a particular purpose,
he must satisfy himself that they are fit for that purpose.
Section 16 of SOGA provides that "subject to the provisions of this Act and of any other
law for the time being in force, there is no implied warranty or condition as to the quality
or fitness for any particular purpose of goods supplied under a contract of sale".
In simple words, it is not the seller's duty to give to the buyer the goods which are fit for a
suitable purpose of the buyer. If he makes a wrong selection, he cannot blame the seller if
the goods turn out to be defective or do not serve his purpose.
The principle was applied in the case of Ward v. Hobbs. (1878) 4 A.C. 13, where certain
pigs were sold by auction and no warranty was given by seller in respect of any fault or
error of description. The buyer paid the price for healthy pigs. But they were ill and all but
one died of typhoid fever. They also infected some of the buyer's own pigs. It was held that
there was no implied condition or warranty that the pigs were of good health. It was the
buyer's duty to satisfy himself regarding the health of the pigs.
Exceptions to the doctrine of Caveat Emptor: (1) Where the seller makes a false
representation and the buyer relies on it (2) When the seller actively conceals a defect in

the goods which is not visible on a reasonable examination of the same. (3) When the
buyer, relying upon the skill and judgement of the seller, has expressly or impliedly
communicated to him the purpose for which the goods are required. (4) Where goods are
bought by description from a seller who deals in goods of that description.
NB: Caveat Venditor is a Latin term which means let the seller beware. The person selling
goods is accountable for providing information about the goods to the seller. It is a counter
to caveat emptor.
Passing of Property or Transfer of Ownership (Sections 18-22)
The sole purpose of a sale is the transfer of ownership of goods from the seller to the buyer.
It is important to know the precise moment of time at which the property in the goods passes
from the seller to the buyer for the following reasons:
(a) The general rule is that risk follows the ownership, whether the delivery has been made
or not. If the goods are lost or damaged by accident or otherwise, then, subject to certain
exceptions, the loss falls on the owner of the goods at the time they are lost or damaged.
(b) When there is a danger of the goods being damaged by the action of third parties it is
generally the owner who can take action.
(c) The rights of third parties may depend upon the passing of the property if the buyer
resells the goods to a third-party, the third-party will only obtain a good title if the property
in the goods has passed to the buyer before or at the time of the resale. Similarly, if the
seller, in breach of his contract with the buyer, attempts to sell the goods to a third party in
the goods, has not passed to the buyer, e.g., where there is only an agreement to sell.
(d) In case of insolvency of either the seller or the buyer, it is necessary to know whether
the goods can be taken over by the official assignee or the official receiver. It will depend
upon whether the property in the goods was with the party adjudged insolvent.
Thus in this context, ownership and possession are two distinct concepts and these two can
at times remain separately with two different persons.
Passing of property in specific goods
In a sale of specific or ascertained goods, the property passes to the buyer as and when the

parties intended to pass. The intention must be gathered from the terms of the contract, the
conduct of the parties, and the circumstances of the case.
Unless a contrary intention appears, the following rules are applicable for ascertaining the
intention of the parties:
RULES OF TRANSFER PROPERTY BETWEEN SELLER & BUYER
In a contract of sale the transfer of property in goods i.e. ownership has to be ascertained
so as to know at what time the property in goods passes to the buyer. The ascertainment to
know as to when ownership is transferred is of paramount importance as it answers the
following questions as far as property is concerned; that at whose risk the goods are at a
given moment, who can pass a good title by resale/ other dealings with the goods and to
whom the goods belong in the event of bankruptcy of the buyer before the payment of the
price.
The general rule as far as the above proposition is that: unless otherwise agreed, the goods
remains at sellers risk until the property therein is transferred to the buyer, whereupon the
goods are at the buyers risk whether delivery has been made or not. In that regard therefore
the ascertainment as to the transfer of ownership has been dealt with by the rules provided
under section 20 of Cap 214.
Thus, transfer of property between seller and buyer is regulated by four basic RULES,
i.e Rule I-IV. The Rules are set out in S. 20 (a) (b) (c) (d) of Cap 214.
RULE 1: (a) Where there is an unconditional contract for the sale of specific goods in a
deliverable state, the property passes to the buyer when the contract is made.
Deliverable state means such a state that the buyer would be bound to take delivery of the
goods. The fact that the time of delivery or the time of payment is postponed does not
prevent the property from passing at once. (Section 20 (a) )
This rule entails that where the goods in a deliverable state are identified and ascertained
by the buyer and the transaction is unconditional the property in goods passes to the buyer
as was stated in the case of SADRU H SAID C/O SIDI V R31. In this case where the
31
[1980] TLR 265

appellant sold the car to the complainant and after the payment of the price was completed
the motor vehicle remained at the premises of the seller who in turn shifted the motor
vehicle to the other place.
The court held that The appellant was liable on theft against section 265 of the penal code
as the property in goods has passed to the buyer pursuant to section 20 rule I of Cap 214
that in a contract of unconditional sale of specific goods in a deliverable state the property
in goods passes to the buyer at the time when the contract is made.
RULE II: (b) Where there is a contract for the sale of specific goods not in a deliverable
state, i.e., the seller has to do something to the goods to put them in a deliverable state, the
property does not pass until that thing is done and the buyer has notice of it. (Section 20
(b)).
Illustrations: A certain quantity of oil was brought. The oil was to be filled into casks by
the seller and then taken away by the buyer. Some casks were filled in the presence of buyer
but, before the remained could be filled, a fire broke out and the entire quantity of oil has
destroyed, Held, the buyer must bear the loss of the oil which was put into the casks (i.e.,
put in deliverable state) and. the seller must bear the loss of the remainder (Rugg v. Minett
(1809) 11 East ~10).
In the case of CARLOS FEDERSPIEL& COSA V CHARLES TWIGG & CO LTD 32
the court held that where the risk is still on the seller this may be evidence that the property
has not passed. Blackburn J, in the case of ALLISON V. BRISTOL MARINE INS. CO
LTD33 stated that an obligation to insure placed upon one party by the contract is also an
indication that he bears the risk and it has been said that this is an indication that he also
has the property.
RULE III: (c) Where there is a sale of specific goods. in a deliverable state, but the seller
is bound to weigh, measure, test or do something with reference to the goods for the purpose
of ascertaining the -price, the property to the goods for the purpose of ascertaining the price,
does not pass until that thing is done and the buyer has notice of it. (Section 20 (c))
32
[1957] 1Llyods Rep 240 at 255
33
[1876]1 App case 209, at 229

This can be illustrated IN LORD ELDON V HEDLEY BROS34 where sold the haystacks
for delivery at buyers convenience and the price was paid at once though liable to
adjustment when the hay was weighed on delivery. Then it was held that the property
passed at once.
Moreover, it is probable that goods/ property would be held to have passed if the goods
have been delivered, although the seller has still to do something to ascertain the price; for
instance by looking up the list price in a catalogue. In NANKA BRUCE V COMMON
WEALTH TRUST LTD35 where A sold cocoa to B at an agreed price per 60lb, it being
arranged that B would resell the goods and the cocoa would then be weighed in order to
ascertain the total amount due from A to B. It was held that the weighing did not make the
contract conditional and that the property passed to B before the price was ascertained.
RULE IV: The fourth rule to ascertain intention of the parties when property passes to the
buyer is provided for under section 20 rule IV of Cap 214. This rule deals with a different
type of transaction altogether, although it is very similar to a conditional sale and may
become a sale in due course 36. It stipulates: "When goods are delivered to the buyer on
approval or on sale or return or other similar terms, the property therein passes to the
buyer
(i) when he signifies his approval or acceptance to the seller or does any other
act adopting the transaction;
(ii) 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 if no time has
been fixed, on the expiration of a reasonable time; and what is reasonable
time is a question of fact."
On signification of acceptance to the seller, the buyer cannot repudiate the contract of sale
and reject the goods on the ground that there was breach of contract. This is well illustrated
in the case of MUSA MAHABA V. RUKIA SHAMTE37. In the case, the respondent
34
[1935] 2 KB 1
35
(1926) AC 77
36
P.S Atiyah : The Sale of Goods, p.231.
37
[1979] LRT n. 6.

offered to sell the appellant a Singer Sewing Machine. The appellant accepted the offer and
price were agreed.
The appellant paid half price with an agreement that the rest be paid by monthly
installment, and the appellant receives the machine on the same date and took it to his
home. The respondent left her home for two months and to that time, the appellant had not
paid the first installment.
On demand, the appellant refuse to pay asserting that it was not of a singer make and that
it was not in proper working order and he demanded the refund of his half price and to the
respondent to collect her sewing machine.
The respondent rejected the repudiation of the contract and referred the matter to the court.
The court held, inter alia, that the right to repudiate a contract and reject the goods on the
ground of breach of contract cannot be exercised after the buyer has accepted the goods.
The court also held and explain that a buyer is deemed to have accepted the goods when
intimates to the seller that he has accepted the goods or retains them without indicating that
he has rejected them, or does any act which is inconsistent with the ownership of the seller.
(Justice Samatta ( as he then was).
Likewise, under the rule, the buyer will have his intention implied when he signifies his
approval or acceptance to the seller or does any other act adopting the transaction. The case
of KIRKHAM V. ATTENBOROUGH38 gives illustration. In the case, a jewellery was
sent by A to B "on sale or return". B pledged the jewellery with C. It was held that the
pledge was an act adopting the transaction, so that the property passed to B, and C was
entitled to retain the jewellery.
TRANSFER OF TITLES
THE MAXIM NEMO DAT QUOD NON HABET

The law starts from the policy of property protection expressed in the Latin nemo dat quod
non habet. The maxim simply means no one can give or transfer what he does not have.
It further insists that no one can pass a better title than what he has 39. The principle is
embodied in the provision of section 23 of Law of sales of Goods Act 40, which is to the
38 [1989] 1QB 201.

39Rawlings, P.,(2007). Commercial Law. University of London Press: London
40
[Cap 214 R.E 2002]

effect that where goods are sold by a non-owner and in fact without the original owner
permission, the bonafide purchaser acquire no better title than the seller had unless and
otherwise the owner is precluded from denying the sellers authority to sell the property.
It should be noted, that the seller may not be always the owner of the goods, sometimes he
may have stolen them. Likewise, he may believe he is the owner when in fact he has been
misled by the previous seller, and his buyer gets no better title than he has, then the goods
are to be returned to the true owner and the buyer can then recover damages from the
seller41.
The above position is affirmed in the case of Rowland v Divall42, where the claimant, a
car dealer, bought a car from the defendant for 334. He painted the car and put it in his
showroom and sold it to a customer for 400. Two months later the car was impounded by
the police as it had been stolen. It was then returned to the original owner. It was therefore
held that the defendant did not have the right to sell the goods as he did not obtain good
title from the thief. Ownership remained with the original owner. The defendant had 2
months use of the car which he did not have to pay for and the claimant was not entitled to
any compensation for the work carried out on the car.
As Lord Denning in Bishopsgate Motor Finance Corporation Ltd v Transport Brakes

Ltd43, stated that in the development of our law, two principles have striven for
mastery. The first is the protection of property: no one can give a better title than he himself
possesses. The second is for the protection of commercial transactions: the person who
takes in good faith and for value without notice should get better title. The first principle
has held sway for a long time, but it has been modified by the common law itself and by
statute so to meet the needs of our times. This quote is important since it establishes two
important principles. On the one hand, the need to protect the proprietary right of the
original owner since he had better title to the good than anyone else. On the other hand the
need to protect commercial transactions because the buyer takes the goods in good faith
for the value offered to him44. English Law seems to state that the general rule is in line
41
Okany M. C., (2001). Nigerian Commercial Law. University Press: Lagos at p. 261
42
[1923] 2 KB 500
43
[1949] I KB 332
44
Rawlings, P.,(2007). Commercial Law. University of London Press: London.

with the protection of the original buyers rights, the law has developed several exceptions
to this rule which includes but not limited to the followings:-
Estoppel, The exception of estoppel is used when the owner of the goods is refrained from
the denying the sellers authority as his conduct makes it appear to the buyer that the seller
has the owners consent to sell the goods. Thus, the title of the property of the goods will
be transferred to the buyer should he buy the goods. This exception is well enunciated in
the case of Eastern Distributers Ltd v Goldring 45.
The second exception is the sale by a mercantile agent. This exception is stated in section
27 of the Sale of Goods Act46. Any sale by the mercantile agent made in the normal course
of business is valid as long as the agent had the consent by the owner of the goods which
he has possession of. The sale is valid as though the agent had been expressly given the
authority by the owner. But, the buyer must have acted in good faith and no notice
expressing that the seller was not authorized was obtained at the time of the contract. The
same was explained In the case of Folkes v King47.
The next exception to the rule is sale under a voidable title. This exception is provided
under section 25 of the sales of Goods Act 48, goods obtained by the seller was under a
voidable contract when the consent of the original owner is caused by elements under
section 15 or 16 of Contracts Act49. An example to explain this would be when A took the
goods from B by coercion and sold it to C who bought it in good faith. The title of the
property of the goods will be transferred to C.
Another exception to the rule is the sale by a seller in possession after sale. The provision
that expresses this is section of 27 of the law of Sales of Goods Act 50. This provision means
that should the seller sell the goods that was bought by a previous buyer but is still in the
sellers possession to a second buyer, the second buyer will obtain a good title to the goods
he bought from the seller in good faith. The first buyer will lose his title on the goods but
he is entitled to sue the seller who would be liable to him.
45
[1957] 2 QB 600
46
[Cap 214 R.E 2002]
47
[1923] 1 KB 282
48
[Cap 214 R.E 2002]
49
[Cap 345 R.E 2002]
50
Ibid

Other prominent exception to the aforesaid rule includes Sale by one of several joint
owners who is in possession of goods by permission of the co-owners; here the buyer
in good faith gets good title to the goods. Market overt-Open market, where when goods
are sold under an open market recognised by the law, the bonafide purcheser obtains a
better title as per Section 24 of the law of sales of Goods Act 51, And lastly Sale by unpaid
seller who exercises his right to lien, or stoppage in transit to resell the goods as stipulated
under section 40-49 of the Law of sales of Goods Act52.
Generally, despite the fact that the rule need to protect the proprietary right of the original
owner since he had better title to the good than anyone else but on the other hand the need
to protect commercial transactions because the buyer takes the goods in good faith for the
value offered to him, however the first principle has held sway for a long time, but it has
been modified by the common law itself and by statute so as to meet the needs of our own
times.
PERFORMANCE OF A CONTRACT OF SALE (S. 29-39 of SOGA)
It is the duty of the seller and buyer that the contract is performed. The duty of the sellers
is to deliver the goods and that of the buyer to accept the goods and pay for them in
accordance with the contract of sale 53.
Unless otherwise agreed, payment of the price and the delivery of the goods and concurrent
conditions, i.e., they both take place at the same time as in a cash sale over a shop counter 54.,
DELIVERY (Sections 31-39 of SOGA)
Delivery is the voluntary transfer of possession from one person to another. Delivery may
be actual, constructive or symbolic.
Actual or physical delivery takes place where the goods are handed over by the seller to
the buyer or his agent authorized to take possession of the goods.
Constructive delivery takes place when the person in possession of the goods
acknowledges that he holds the goods on behalf of and at the disposal of the buyer. For
example, where the seller, after having sold the goods, may hold them as Bailee for the
buyer, there is constructive delivery.
51
[Cap 214 R.E 2002]
52
Ibid Section 40-49
53
Ibid Section 29
54
Sales of Goods Act [Cap 214 R.E 2002]

Symbolic delivery is made by indicating or giving a symbol. Here the goods themselves
are not delivered. but the "means of obtaining possession" of goods is delivered, e.g, by
delivering the key of the warehouse where the goods are stored, bill of lading which will
entitle the holder to receive the goods on the arrival of the ship.
RULES AS TO DELIVERY (S. 31-36 of SOGA).
The following rules apply regarding delivery of goods:
(a) Delivery should have the effect of putting the buyer in possession. (b) The seller must
deliver the goods according to the contract. (c) The seller is to deliver the goods when the
buyer applies for delivery; it is the duty of the buyer to claim delivery.
(d) Where the goods at the time of the sale are in the possession of a third person, there
will be delivery only when that person acknowledges to the buyer that he holds the goods
on his behalf.
(e) The seller should tender delivery so that the buyer can take the goods. It is no duty of
the seller to send or carry the goods to the buyer unless the contract so provides. But the
goods must be in a deliverable state at the time of delivery or tender of delivery. If by the
contract the seller is bound to send the goods to the buyer, but no time is fixed, the seller
is bound to send them within a reas9nable time.
(f) The place of delivery is usually stated in the contract. Where it is so stated, the goods
must be delivered at the specified place during working hours on a working day. Where no
place is mentioned, the goods are to be delivered at a place at which they happen to be at
the time of the contract. of sale and if not then in existence they are to be delivered at the
price they are produced.
(g) The seller has to bear the cost of delivery unless the contract otherwise provides. While
the cost of obtaining delivery is said to be of the buyer, the cost of the putting the goods
into deliverable state must be borne by the seller. In other words. in the absence of an
agreement to the contrary, the expenses of and incidental to making delivery of the goods
must be borne by the seller, the expenses of and incidental to receiving delivery must be
borne by the buyer.
(h) If the goods are to be delivered at a place other than where they are, the risk of
deterioration in transit will, unless otherwise agreed, be borne by the buyer. (i) Unless
otherwise agreed, the buyer is not bound to accept delivery in instalments.

Acceptance of Goods by the Buyer (S. 37 of SOGA).

Acceptance of the goods by the buyer takes place when the buyer: (a) intimates to the seller
that he has accepted the goods; or (b) retains the goods, after the lapse of a reasonable time
without intimating to the seller that he has rejected them; or (c) does any act on the goods
which is inconsistent with the ownership of the seller, e.g., pledges or resells. If the seller
sends the buyer a larger or smaller quantity of goods than ordered, the buyer may: (a) reject
the whole; or (b) accept the whole; or (c) accept the quantity be ordered and reject the rest
If the seller delivers, with the goods ordered goods of a wrong description, the buyer may
accept the goods ordered and reject the rest, or reject the whole.
Where the buyer rightly rejects the goods, he is not bound to return the rejected goods to
the seller. It is sufficient if he intimates to seller that he refuses to accept them. In that case,
the seller has to remove them.
Instalment Deliveries
When there is a contract for the sale of goods to be delivered in stated instalments which
are to be separately paid for, and either the buyer or the seller commits a breach of contract,
it depends on the terms of the contract whether the breach is a repudiation of the whole
contract or a severable breach merely giving right to claim for damages.
Suits for Breach of Contract
Were the property in the goods has passed to the buyer, the seller may sue him for the price.
Where the price is payable on a certain day regardless of delivery, the seller may sue for
the price, if it is not paid on that day, although the property in the goods has not passed.
Where the buyer wrongfully neglects or refuses to accept the goods and pay for them, the
seller may sue the buyer for damages for non-acceptance.
Where the seller wrongfully neglects or refuses to deliver the goods to the buyer, the buyer
may sue him for damages for non-delivery.
Where there is a breach of warranty or where the buyer elects or is compelled to treat the
breach of condition as a breach of warranty, the buyer cannot reject the goods. He can set
breach of warranty in extinction or diminution of the price payable by him and if loss
suffered by him is more than the price he may sue for the damages.

If the buyer has paid the price and the goods are not delivered, the buyer can sue the seller
for the recovery of the amount paid. In appropriate cases the buyer can also get an order
from the Court that the specific goods ought to be delivered.
Anticipatory Breach
Where either party to a contract of sale repudiates the contract before the date of
delivery, the other party may, either treat the contract as still subsisting and wait till the
date of delivery, or he may treat the contract as rescinded and sue for damages for the
breach.
In case the contract is treated as still subsisting it would be for the benefit of both the parties
and the party who had originally repudiated will not be deprived of: (a) his right of
performance on the due date in spite of his prior repudiation or (b) his rights to set up any
defense for non-performance which might have actually arisen after the date of the prior
repudiation.
Measure of Damages
The Act does not specifically provide for rules as regards the measure of damages except
stating that nothing in the Act shall affect the right of the seller or the buyer to recover
interest or special damages in any case were by law they are entitled to the same. The
inference is that the rules laid down in Section 73 of the Cap 345 will apply.
RIGHTS OF UNPAID SELLER
In a contract for the sale of goods, both the buyer and seller have respective duties which
they are bound to undertake. The seller has a duty to deliver the goods which form the
subject matter of the contract while the buyer is under a duty to accept and pay
consideration for the goods 55.
None performs of these duties gives rise to specific remedies which the injured party is
entitled to. However, we shall focus on the rights of the unpaid seller.
Section 40 of SOGA is to the effect that the seller of goods is deemed to be unpaid seller:
(a) When the whole of the price has not been paid or tendered; or (b) When a conditional
55
Section 29 of SOGA

payment was made by a bill of exchange or other negotiable instrument, and the instrument
has been dishonoured.
For one to have qualified as an unpaid seller; the buyer must have defaulted in making full
payments as per the terms of the contract and where conditional payment is used; for
instance, the bill of exchange or other types of negotiable instruments they must have been
dishonored.
The unpaid seller has two classes of rights open to him that is the right against the goods
and rights against the buyer.
I) RIGHTS AGAINST THE GOODS (S. 40-49 of SOGA)
Where property in the goods has passed to the buyer, the unpaid seller who has not given
up possession of the goods may retain them as lien until the buyer pays his debt. But in an
instance where he gave up possessions to a seller undergoing insolvency, the unpaid seller
has a right of stopping the goods in transit. A right of resale may be available but it has
to be carried out as per the law. Where property in the goods has not been transferred to
the buyer, the unpaid seller in addition to his other rights is entitled to withhold delivery
which is similar to his right of lien and conduct a stoppage in transitu.
(a) The right of Lien (S. 42-44 of SOGA)
A seller has a right to hold goods as lien in the following cases; where the contract of sale
did not stipulate payment on credit terms, or where the goods where sold on credit but the
terms related to the credit sale have expired or where the buyer has become insolvent 56.
Therefore a seller who is unpaid can exercise this right regardless of his position as an
agent, bailee or custodier of the buyer as long as he is in possession of the goods 57 in a case
where the seller has made part delivery of the goods, he is entitled to retain the undelivered
goods as lien as long as he made no agreement to waive the lien or his right of retention 58.
56
Sales of Goods Act [Cap 214 R.E 2002] Section 42 (1)
57
Ibid Section 42 (2)
58
Ibid Section 43

The sellers right of lien can however be lost where; the has been lawful possession of
the goods by the buyer or his agents, where the seller himself decides to waive it or where
goods have been delivered to a carrier, bailee or custodier so that they can be transferred
to the buyer , without reserving the right of disposal of the goods59.
It is important to note that the unpaid seller with a right of retention does not lose his lien
or right of retention merely because he has obtained judgment or decree for the price of the
goods.
(b) Stoppage in Transitu ( S. 45-47 of SOGA)

A seller who finds himself in a situation where the buyer has become insolvent but his dues
have not been paid and is no longer in possession of the goods; has a right of stopping the
goods where they are in the course of transit and retaining them until payment has been
made60.
Goods are said to be in the course of transit; Where they have been delivered to the carrier,
bailee or custodiers for purposes of transmission to the buyer or where the buyer rejects
the goods but the carrier, bailee or custodian remains in possession of the goods 61 .
The transit comes to an end in situations where the goods arrive at the appointed destination
and the carrier informs the seller or his agents about it 62 .
The case of Dixon v Baldwell makes it clear that a transit comes to an end at the point
where the goods have arrived at their destination and the carrier is awaiting orders from
the seller, this goes hand in hand with Section 46 (6) where the carrier or bailee wrongly
refuses to deliver the goods to the seller or his agents.
59
Ibid Section 44
60
Ibid Section 45
61
Sale of Goods Act Section 46
62
Ibid Section 46 (2)

When the goods are delivered to a ship chartered by the buyer, it is a question, depending
on the circumstances of the particular case, whether they are in the possession of the master
as a carrier, or as agent to the buyer 63.
This right of stoppage is exercised by taking actual possession of the goods and if the goods
are in the course of transit, the seller can issue a notice of his claim to the carrier bailee or
custodier who is in possession of the goods 64.
Where possible, the seller can direct his notice to the principle at a reasonable time, so that
he can inform his servants not to deliver to the buyer.
Effect of issuing the notice: After the notice has been given to the carrier who is in
possession of the goods, redelivery of the goods must take place as per the sellers direction
and the expenses incurred are to be met by the seller 65. But where his notice was ignored
by the carrier or the buyer as indicated in Verchures Creameries v Hull and Neither lands
SS Co, he can sue either sue the buyer or the carrier but not both.
(C) Resale by the Buyer or seller (S. 48-49)
The unpaid seller right of lien, stoppage in transitu or lien is not affected by the buyers
decision to carry out a sale or dispose off the goods in any way unless, he assents to it.
However, there is an exception to this general rule, especially where the documents of title
has been lawfully transferred to the seller who in turn, carries out a resale to a third party.
The title of such a party defeats the sellers rights as long as it is acquired in good faith and
a valuable consideration is paid. This is affirmed by the decision in Cahn v Pocketts Bristol
Channel Steam Co where it was stated that, the right of stoppage in transit is lost where
the document of title relating to the goods has been sent to the buyer who endorses it to a
63
Ibid Section 46 (5)
64
Ibid Section 47 (1) & (2)
65Ibid

third party, such a party acquires such a title as long as its done in good faith and a valuable
consideration is paid.
Where the transfer of the title is done by other means of a pledge or other disposition of
value, the unpaid sellers rights of lien, stoppage and transit can only be exercised subject
to the rights of the transferee.
It is important to note that the unpaid seller right of lien, stoppage or retention which he
chooses to exercise, does not rescind the contract of sale unless he decides to exercise his
right to resell after the buyer defaults in making payment, In such a case their contract is
rescinded and the unpaid seller can sue for damages without prejudice to any claim he may
have for damage and in R v Ward v Bignall (1967) it was noted that where the seller obtains
more money than the original amount stated in the contract, he is entitled to retain all the
proceeds.
Where the unpaid seller opts not to reserve his right of resale, the new buyer acquires title
against the original buyer and where the unpaid seller deals in perishable products and he
issues a notice to be buyer within a reasonable time to make payments and buyer doesnt
respond, he can go ahead and sell his goods and later on, sue the original buyer for damages
incurred as a result of his breach.
II) RIGHTS AGAINST THE BUYER
REMEDIES AVAILABLE FOR BREACH (Remedies of the seller).
Where property in the goods has been transferred to the buyer, who neglects to carry out
his duty of payment as per their contract, the seller may maintain an action against him for
the price of the goods66. In an instance where the buyer defaults in making payment and
66
Sales of Goods Act [Cap 214 R.E 2002] Section 50 (1)

property in the goods has not passed neither has delivery, the seller can still claim for the
price67.
Where the buyer wrongfully refuses to accept and pay for the goods which are subject to
the contract, the seller can maintain an action against him for damages for non-
acceptance68.
AUCTION SALES
Auction sale refers as a method of sale in which parties are invited to make competing
offers (bids) to purchase an item. The auctioneer, who acts as the agent of the seller until
fall of the hammer, announces completion of the sale in favour of the highest bidder by
striking his desk with a hammer (or in any other customary manner). 69
Auction sale is sale open to the general public and conducted by an auctioneer. An
auctioneer is the person empowered to conduct such a sale, at which property is sold to the
highest bidder. An auction sale is a sale at which a person acts as an agent for the seller
who is called auctioneer.
Auction sale is governed by The Sale of Goods Act70 as provided under section 59 (1) (b)
of the Act that a sale by auction is complete when the auctioneer announces its completion
by the fall of the hammer or in other customary manner, and until such announcement is
made any bidder may retract his bid.
Rights of auctioneers.
Auctioneer has the right not to hold auction on the date of advisement. Auctioneer is
not bound to hold auction on the date of advertisement, as his advertisement is not an offer
but a mere invitation to treaty. As provided in the case of Payne v Cave71, which stands
for the proposition that an auctioneer's request for bids is not an offer but an invitation to
treat.
Auctioneer has the right to reserve the price. It is usual for the auctioneer to notify a
reserve price. Reserve price is the lowest price below which the auctioneer will not sell.
This reserve price is fixed by the auctioneer to protect him from the goods selling at
67
Ibid Section 50 (2)
68
Ibid Section 51
69
A dictionary of Law , Oxford University Press, 2006
70
[CAP 214 of 2002].
71
(1980) 4 SCC 636

extremely low price. Where the sale is notified subject to reserve price, the buyer is bound
by the reserve price even if the auctioneer by mistake accepted a bid lower than the reserve
price.
This is as provided under s. 59 (1) (d) of The sales of Goods Act,72 that, a sale by auction
may be notified to be subject to a reserved or upset price, and a right to bid may also be
reserved expressly by or on behalf of the seller.
The auctioneer has the right to make auction subject to any condition he likes. The
terms of particular auction may import a right to the seller to accept any bid whether it is
the highest or not. A condition in auction sale absolving the seller from liability for any
misdescription as to quality or quantity, so long as it does not go to the root of the
transaction would preclude the purchaser from claiming damages 73.
In the case of Coffee Board v. Famous Coffee and Tea Work 74, there was a conditional
auction sale of coffee the seller does not bind himself to accept the highest bid or any bid,
he is not bound to assign any reason for his decision and his decision shall be final and
conclusive. It was held that the condition clearly imported a right in the seller to accept
any bid, be it the highest one or lower one.
Auctioneer has the right to hold a good and normal contractual rule. Thus the
auctioneer expressly announces that biddings once made cannot be withdrawn, therefore
revocation of an offer before acceptance. As stated in the case of Payne v Cave75, it was
held that the defendant was not bound to purchase the goods. His bid amounted to an offer
which he was entitled to withdraw at any time before the auctioneer signified acceptance
by knocking down the hammer.
Auctioneer has the right to notify the use of pretended bidding. In auction sale, the
auctioneer has to notify the use of pretended bids for raising the price at an auction. Even
when there is with reserve or subject to any upset price only the seller or in his absence one
person acting on his behalf may bid. 76
72
[CAP 214 R.E 200]
73
Dr. V. Krishnamachari (2002) Sale of Goods , 8th Ed, J.D. Gogia & Company, New Delhi,
74
AIR 1965 Mad 14.
75
(1789) 3 TR 148.
76
opcit, p.174.

That any person has right to bid on behalf of the seller, but such sale should be announced
rather notified. As stipulated under section 59(1) (c) as where a sale by auction is not
notified to be subject to a right to bid on behalf of the seller, it shall not be lawful for the
seller himself to bid or to employ any person to bid at such sale, or for the auctioneer
knowingly to take any bid from the seller or any such person; any sale contravening this
rule may be treated as fraudulent by the buyer. Therefore, any sale contravening this rule
would be treated as fraudulent by the buyer. 77
Obligations of the auctioneer.
Auctioneer warrants his authority to sell. It is very clear that in an auction sale the whole
process is finalized by falling down the harmer or any other agreed method and that as soon
as that thing is done then such become the complete contract which bids parties to that
auction sale and therefore in that circumstance the auctioneer is warranted his authority to
sell.
Though he has the right to reserve the price, his failure to doing the same make him obliged
to sale. In the case of Barry v Davies78 where the auctioneer withdrew goods from an
auction (the good has no reserve price) when a bonafide bid of 200 pounds was effected, it
was ruled that, if the auction is advertised as being without a reserve price, then the
auctioneer is bound to sell to the highest bidder and cannot withdraw the sale simply
because the price is low.
Auctioneer warrants giving quiet and peaceful possession of goods against payment
of the price. In auction sale, where the goods are at deliverable state, then in such case the
contract is complete, at the moment when the bid is accepted. In such sale the property
passes immediately to the bidder and the auctioneer is warranted to give possession of such
good to the person happened to be the highest bidder subject to the payment of agreed
price.
Rights of the bidders.
The bidder has the right to retract his bid. The bid is an offer and if the bid is not
accepted it would not be an agreement to sell and therefore the bidder may retract his bid.
77
Dr.S.C.Tripathi (1998) The Sale of Goods Act, 1st Ed, Central law Publication, Allahabad. P.140
78
[2000] 1 WLR 1962

As provide under section 59(1) (b) of The sale of Goods Act79 that a sale by auction is
complete when the auctioneer announces its completion by the fall of the hammer or in
other customary manner, and until such announcement is made any bidder may retract his
bid.
A bidder has the option to withdraw his bid before the acceptance of bid, therefore his
security amount cannot be forfeited, but if he does so after the fall of hammer, it amounts
to breach of contract and his security may be forfeited.
The bidder has right to receive the delivery of the goods. The main reason for a bidder
to involve in an auction sale is to make sure that at the end of the day such property in
goods is passing to him exclusively. It is the right of the bidder that whenever he happened
to be the highest bidder in an auction sale, subject to the mode used to finalize the trade,
such property is delivered to him.
Right to sue for specific performance of the contract. The bidder is also protected by
the law in the circumstance that an auctioneer is not ready to perform his contractual
obligation. In that circumstance a bidder is entitled with the right to sue for the specific
performance when it happen that he will otherwise affected and that any other remedies
are not proper to him.
Right to sue seller for damage for the breach of warranty. Apart from right to sue for
the specific performance, a bidder has also the right to sue whenever an auctioneer has
breached any warrant in that auction and that it caused damage on the part of bidder.
Obligations of the bidder.
The bidder has a duty to pay for the goods in accordance with terms of contract.
In any auction sale, a bidder is making an offer which is required to be accepted by the
auctioneer by falling down the harmer or any other means so agreed or as the custom of
the that business. Therefore if it happens that, he as bidder has not retract his bid before
acceptance then it is his obligation to pay the price which he proposed.
The bidder has also the obligation to accept the conditions prescribed by the
auctioneer.
It is the well known right of the auctioneer to make some conditions which must be fulfilled
in an auction sale and that in other side it is the obligation of the bidder to accept the same.
79
[CAP 214 R.E 2002]

For instance if the auction is subjected by the auctioneer to the reserved price or any other
conditions then it is the obligation of the bidder to accept the same as it is the right of the
auctioneer so provided by the law.

Dynamics in auction sale
In auction sale in terms of rights and obligations of auctioneer and the bidders there are
dynamics which occur due to different situations,
In auction sale the seller may reserve the right to bid. Where the seller reserves such right
then the seller or any person on behalf of him can bid, in this situation the right of the seller
should be expressly reserved but the seller himself does not have the right to bid at the
auction and the seller also cannot employ any person to bid on his behalf but the dynamic
of this point is if the auctioneer intentionally take a bid from the seller or from his agent it
is not proper but Section 59(1) (d) that any person has right to bid on behalf of the seller in
a situation that sale should be announced rather notified.
The seller has the obligation to accept the highest bid, but in dynamics he has right to refuse
to knock down the goods to the highest bidder as in Warlow V Harison80, under the Act
the auctioneer has the right to make the auctioned conditional as in Coffee Board V Famous
Coffee and Tea works81 ; there was conditional auction sale of coffee`` the seller does not
bind himself to accept the highest bid or any bid, he is not bound to assign any reason for
his decision and his decision shall be final and conclusive.
In auction sale the auctioneer has the obligation not to bid against each other but if they bid
by different items it is known as the `ring then it is allowed as we can see in the case of M
Lachin Setty and sons Ltd V Coffee Board82.
NB: A knock out agreement between the intending buyers not to bid against each other
is not illegal. See. Lanchman Dass & Others V. Sita Ram & Others (1975) A.I.R Delhi,
159. Restrictions; The auctioneer cannot sell the goods on credit. Also he can not be
compelled to accept a cheque for the purchase price.

80
1E 295
81
AIR 1965 Mad 14
82
(1991) AIR 162

RIGHTS & DUTIES BTN BUYER & SELLER

S.29 Cap 214-the duty of seller to deliver goods and of the buyer to accept and pay the
price
S.36 (1) of Cap 214-buyers right to examine the goods before he/she takes delivery.
S. 36 (2) of Cap 214-sellers duty to afford the buyer, on request, a reasonable opportunity
of examining the goods.
S.38 of Cap 214, buyer is not bound to return rejected goods to the seller.
Trading Contracts involving rail or Sea Transit

In the case of a contract for the sale of goods which are to be shipped by sea a number of
conditions are attached by the parties or by custom and practice of merchants. Some of the
important types of such contracts are given below:
(a) F.O.B (Free on Board): Under an F.O.B. contract, it is the duty of the seller to put the
goods on board a ship at his own expenses. The property in goods passes to the buyer only
after the goods have been put on board the ship, usually named by the buyer.
The seller must notify the buyer immediately that the goods have been delivered on board,
so that the buyer may insure them. If he fails to do so the goods shall be deemed to be at
seller's risk during such sea transit.
(b) F.O.R. (Free on Rail): Similar position prevails in these contracts as in the case of
F.O.B contracts.
(c) C .I.F. or C.F.I. (Cost insurance and freight): A CIF contract is a contract for the
sale of insured goods lost or not lost to be implemented by transfer of proper documents.
In such types of contracts, the seller not only bears all the expenses of put the goods on
board the ship as in an F.O.B. contract but also to bear the freight and insurance charges.
He will arrange for an insurance of the goods for the benefit of the buyer. On the tender
of documents, the buyer is required to pay and then take delivery. He has a right to reject
the goods if they are not according to the contract.
(d) Ex-Ship: Here the seller is bound to arrange the shipment of the goods to the port of
destination, and to such further inland destination as the buyer may stipulate. The buyer is

not bound to pay until the goods are ready for unloading from the ship and all freight
charges paid. The goods travel at the seller's risk but he is not bound to insure them.
***********************************END***********************************
THERE IS No AnY SoUl OuT THERE WiThOuT THeIr OwN VICISSITUDES
WABILLAHI TAWFIQ
ENGINEERED
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Tsar MWAKISIKI, MWAKISIKI, EDWARDS
Contacts:
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The Law Relating To Sales of Goods

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Moshi Co-operative University

From the SelectedWorks of MWAKISIKI MWAKISIKI

Summer October 9, 2017

THE LAW RELATING TO SALES OF

This work is licensed under a Creative Commons CC_BY International License.

Available at: https://works.bepress.com/mwakisiki-

MOSHI CO-OPERATIVE UNIVERSITY

THE LAW RELATING TO SALES OF GOODS

Prepared by Tsar MWAKISIKI MWAKISIKI EDWARDS - 1 -

Prepared by Tsar MWAKISIKI MWAKISIKI EDWARDS - 2 -

Prepared by Tsar MWAKISIKI MWAKISIKI EDWARDS - 3 -

Prepared by Tsar MWAKISIKI MWAKISIKI EDWARDS - 4 -

Prepared by Tsar MWAKISIKI MWAKISIKI EDWARDS - 5 -

Prepared by Tsar MWAKISIKI MWAKISIKI EDWARDS - 6 -

SUBJECT MATTER OF A CONTRACT OF SALE

Prepared by Tsar MWAKISIKI MWAKISIKI EDWARDS - 7 -

Prepared by Tsar MWAKISIKI MWAKISIKI EDWARDS - 8 -

(ii) Goods perishing after agreement to sell

Prepared by Tsar MWAKISIKI MWAKISIKI EDWARDS - 9 -

In Milnes v Gery29 where the defendant contracted to purchase at a price to be ascertained

TERMS OF A CONTRACT OF SALE

Conditions and Warranties

Prepared by Tsar MWAKISIKI MWAKISIKI EDWARDS- 10 -

Circumstances where a condition may be treated as warranty

Prepared by Tsar MWAKISIKI MWAKISIKI EDWARDS- 11 -

Implied Conditions as to title

Prepared by Tsar MWAKISIKI MWAKISIKI EDWARDS- 12 -

recover the full price paid by him.

Implied conditions under a sale by description

In a sale by description there are the following implied conditions:

Prepared by Tsar MWAKISIKI MWAKISIKI EDWARDS- 13 -

(d) Condition as to fitness for a particular purpose: Ordinarily, in a contract of sale,

Implied Condition as to sale by sample (Section 17 of SOGA)

Prepared by Tsar MWAKISIKI MWAKISIKI EDWARDS- 14 -

THE DOCTRINE OF CAVEAT EMPTOR

Prepared by Tsar MWAKISIKI MWAKISIKI EDWARDS- 15 -

Passing of Property or Transfer of Ownership (Sections 18-22)

Passing of property in specific goods

Prepared by Tsar MWAKISIKI MWAKISIKI EDWARDS- 16 -

RULES OF TRANSFER PROPERTY BETWEEN SELLER & BUYER

Prepared by Tsar MWAKISIKI MWAKISIKI EDWARDS- 17 -

Prepared by Tsar MWAKISIKI MWAKISIKI EDWARDS- 18 -

Prepared by Tsar MWAKISIKI MWAKISIKI EDWARDS- 19 -

THE MAXIM NEMO DAT QUOD NON HABET

38 [1989] 1QB 201.

Prepared by Tsar MWAKISIKI MWAKISIKI EDWARDS- 20 -

As Lord Denning in Bishopsgate Motor Finance Corporation Ltd v Transport Brakes

Prepared by Tsar MWAKISIKI MWAKISIKI EDWARDS- 21 -

Prepared by Tsar MWAKISIKI MWAKISIKI EDWARDS- 22 -

Prepared by Tsar MWAKISIKI MWAKISIKI EDWARDS- 23 -

Prepared by Tsar MWAKISIKI MWAKISIKI EDWARDS- 24 -

Acceptance of Goods by the Buyer (S. 37 of SOGA).

Prepared by Tsar MWAKISIKI MWAKISIKI EDWARDS- 25 -

consideration for the goods 55.

Prepared by Tsar MWAKISIKI MWAKISIKI EDWARDS- 26 -

has been dishonoured.

and rights against the buyer.

I) RIGHTS AGAINST THE GOODS (S. 40-49 of SOGA)

Prepared by Tsar MWAKISIKI MWAKISIKI EDWARDS- 27 -

to the buyer , without reserving the right of disposal of the goods59.

(b) Stoppage in Transitu ( S. 45-47 of SOGA)

and the carrier informs the seller or his agents about it 62 .

refuses to deliver the goods to the seller or his agents.