(3) Where under a contract of sale the property in the goods in transferred from the seller to the buyer, the contract is called a sale, but where the transfer of the. Auction sales. Repeal. This Act may be cited as the Sale of Goods Act. short title. the goods is transferred from the seller to the buyer the contract is. Download full-text PDF. IOSR Journal Of The Sale of Goods Act, is a law that deals with transfer of .. that suffers can terminate the entire sales contract.
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Auction sales. An Act for codifying the Law relating to the Sale of. Goods. [20th February goods is transferred from the seller to the buyer the contract. Auction sales. This Act may be cited as the Sale of Goods Act. 2. (4) Goods are in a deliverable state within the meaning of this Act when they are. Sale of Goods. Act being. Chapter S-1 of The Revised Statutes of Saskatchewan, 57 Auction sales 1 This Act may be cited as The Sale of Goods Act.
The seller must show that the buyer had reasonable notice of the existence of the clause and that it was intended to be an integral part of the contract. On the one hand it came to be said that there were terms more important even than conditions these are called fundamental terms. Shortly before tendering the fourth installment, the sellers told the buyers that because a particular cloth was not available the delivery would be one suit short. Sale by description. However, s 21 the equivalent of S.
The House of Lords held that as between the plaintiff and defendant it was not part of the description that the goods should be suitable for feeding mink. The answer given by the House of Lords was that these words were not needed to identify the goods. A sale is not by description where the buyer makes it clear that he is buying a particular thing because of its unique qualities and that no other will do, or where there is absolutely no reliance by the buyer on the description. Mr Hull made it clear that he was not an expert in German expressionist paintings.
In due course, it was discovered to be a forgery.
The majority of the Court of Appeal held that it had not been a sale by description. The principal test relied on by the Court of Appeal was that of reliance. It was pointed out that paintings are often sold accompanied by views as to their provenance. Successful artists are of course often copied by contemporaries, associates and pupils.
It would be odd if the legal effect of every statement about the identity of the artist was treated in the same way. On any view, this case is very close to the line. In other cases, such as the Ashington Piggeries case, it would be clear that some of the words attached are words of description but it may be held that other words are not.
For this reason therefore, a sale of a manufactured item will nearly always be one by description except where it is second hand because articles made to an identical design are not generally bought as unique goods but as goods corresponding to that design. It was held in this case to be a sale by description because the buyer relied in part on a newspaper advertisement issued by the seller. Where there has been a sale by description, the court then has to decide whether or not the goods correspond with the description.
In a number of cases, courts have taken very strict views on this question. That was a contract for the purchase of Australian canned fruit. It was stated that the cans were in cases containing 30 tins each.
The seller delivered the right number of cans but in cases which contained only 24 tins. It was not suggested that there was anything wrong with the fruit or that it made any significant difference whether the fruit was in cases of 30 or 24 cans. Similarly, in Arcos v Ranaasen  AC , the contract was for a quantity of staves half an inch thick. The evidence was that the staves were perfectly satisfactory for the purpose for which the buyer had bought them, that is, the making of cement barrels, but the House of Lords held that the goods did not correspond with the description.
Condition on a sale by sample s. When a sale by sample is agreed upon by the parties to the contract, the implied conditions are; That the buyer shall have a reasonable opportunity of comparing the bulk with the sample.
That the bulk of the goods to be supplied by the seller should correspond with the sample a far as quality is concerned. This is so because here, the sample here, in effect, largely replaces the need for any description by words of the goods. The cloth in every way corresponded to the sample.
However, a latent fault in the cloth caused the manufactured clothes to part at the seams under moderate strain. The buyers sued, claiming that the cloth was not fit for the purpose. The sellers argued that as the cloth corresponded with the sample there was no case to answer.
It was held that, the question is how far does the examination of the sample exclude the warranty that goods will be fit for the purpose. Thus the warranty that the goods would be fit for the purpose was not, in this case, excluded because the goods corresponded with the sample. Lord Macnaghten said: After all, the office of a sample is to present to the eye the real meaning and intention of the parties with regard to the subject-matter of the contract which, owing to the imperfection of language, it may be difficult or impossible to express in words.
The sample speaks for itself. No doubt the sample might be made to say a great deal more. Pulled to pieces and examined by unusual tests which curiosity or suspicion might suggest, it would doubtless reveal every secret of its construction. But that is not the way in which business is done in this country. It should be noted that the fact that the buyer has examined the goods will not release the seller of liability where the examination was one which could not have reasonably shown the defect complained of.
He tested a sample by pulling back the elastic; they proved satisfactory. However, in normal use they snapped; this was because of a latent defect in the plastic. The buyer sued under s 16 2 c which provides that the goods should be free from defects rendering them unmerchantable not apparent on reasonable examination. The buyer had made a reasonable examination and so he succeeded. Condition in a sale by sample as well as by describe.
Where goods are sold by sample as well as by description, there is an implied condition that the bulk of the goods shall correspond both with the sample and with the description. If the goods supplied correspond only with the sample and not with the description, or vice versa, the buyer is entitled to reject the goods. The bulk of the goods must correspond with both.
Condition as to fitness for purpose. Ordinarily there is no implied condition or warranty that the goods supplied by the seller should be fit for the particular purpose of the buyer.
The rule Caveat emptor applies instead. It means that while buying it is the responsibility of the buyer to ensure that the goods correspond to the particular purpose he wants them to meet. However in the following situations, the responsibility of the fitness as to Goods falls on the seller; a The buyer makes known to the seller the particular purpose for which he requires goods, b The buyer and seller relies on the skill and judgment of the buyer; and, c The sellers business is to supply such goods whether he is the manufacturer or producer or not.
This may be done either explicitly or by implication from the contract of sale. If the goods can be used for many purposes, the buyer should make known the specific purposes to the seller; otherwise the condition as to fitness would not apply.
The court observed that the buyer had no right to reject the cloth because although it was not fit for the specific purpose, it was fit for the purpose of packing otherwise for which it was commonly used. There was no breach of condition of fitness in this case. In this case had the buyer have informed to the seller that he needs the cloth for the packing of food products, situation would have been different. It is not necessary that the purpose should be expressed in words only.
If the goods could only be used for one purpose only, it is implied that the seller had knowledge about the purpose for which the buyer need the goods. In MacGill v Talbot GWD , a classic car collector advised a commercial car dealer that he wished to buy a Rolls Royce that was reasonably fit for the purpose of economic restoration,. It was held that the buyer had made known a particular purpose, in the light of previous dealings between the parties.
In Priest v Last 2K. This was so because though there was only one ordinary purpose for a hot-water bottle, the buyer had required one for a particular purpose within the Act. Secondly, the buyer must have relied upon the skill and judgment of the seller. B asked S, he need a car for touring purpose, S supplies a car which is not fit for touring. A breach of condition has been committed here. Lord Wright in Grant v Australian Knitting Mills Ltd  AC 85 at 97 had this to say; The reliance will seldom be express it will usually be by implication from the circumstances; thus to take a case like that in question, of a purchase from a retailer the reliance will be in general inferred from the fact that a buyer goes to the shop in the confidence that the tradesman has selected his stock with skill and judgement.
At this point, reliance will be presumed unless the seller can show it to have been unreasonable. However mere mention of a particular trade name by the buyer does not mean that he has ordered for the product of that trade name only. He may still rely upon the skill and judgment of the seller.
Thirdly, the seller should be a dealer of the kind of products transacted. Also note that the implied condition as to fitness for purpose only applies in cases of sale to a normal buyer. Where the buyer is suffering from an abnormality, he or she should make known to the seller of such special abnormality or else the seller will be discharged from this duty. In Griffith v Peter Conway Ltd, the plaintiff contracted dermatitis from wearing a tweed coat which she had bought from the defendant.
The issue before court was whether the plaintiff had made her purpose clear to the seller so as to be able to sue or reject the coat for not conforming to the purpose. It was held that since she had a sensitive skin and the coat was not known to cause that disease among the normal skin users, she had failed to make known to the seller the purpose for which the coat was required in the relevant sense. Section 15 a has a proviso for sale under Patent or trade name.
In such a case, there is no implied condition as to the fitness of such a commodity. There is no implied condition for any particular purpose. Read the US decision of, Halterman V.
Condition as to Merchantability. Gray 4 Camp. The condition meant little more than that the goods were commercially saleable. Lillico 2 AC The former depends on whether the buyer: See also Manning J in Doola Singh and Sons v Uganda Foundry and Machinery Works 12 EACA 33 This approach considers quality from the perspective of the reasonable buyer while, by contrast, the usability approach adopted in Kendall considers it from the perspective of the use of the goods, such that the House of Lords held that the animal feed in question was merchantable as it was suitable for feeding to cattle even though it was toxic when the plaintiff fed it to his pheasants.
But where the buyer examines the goods and the defects are such which can be revealed by ordinary examination, the condition of merchantability does not apply to the extent of such defects. In Thornet v. Beers, 1 KB , B wanted to purchase some glue. B was given every facility to open the barrels and inspect them but B did not open the barrels.
Liter on the glue was found to have defects which B could have noted if he had opened the Barrels. The court held that there is no breach of implied condition as to merchantability in this case and B was not entitled to any relief. Later on it turned out to be harmful for his skin because of the presence of hidden sulphites in the underwear which could not have been revealed by ordinary examination. The court held that the implied condition of merchantability is applicable in this case.
Now what amounts to an examination is a question of fact in each case.
Here as against the seller the examination is deemed to be made by the buyer. Packing of goods is an equally important consideration in judging their merchantability. While M was drawing the cork, the bottle broke and M was injured. It was held that the sale was by description and M was entitled to recover damages as the bottle was not of merchantable quality. Condition as to wholesomeness. This condition is only applicable in the sale of eatables.
In the case of food products the condition of fitness or merchantability requires that the goods should be wholesome, that is, it should be fit for consumption. In Chapronier v. The court held that the seller was liable to pay damages as he breached the condition of wholesomeness.
Condition implied by custom. An implied condition as to quality or fitness for a particular purpose may be annexed by the usage of trade. Section 15 c , provides for instances where the purpose of purchasing goods may be ascertained from the conduct of parties to the sale.
Or from the nature of description of the thing purchased. For, example if a water bottle is purchased the purpose for which it is bought is implied in it; in that case the buyer need not tell the seller the purpose for which he buys it as already noted above. In Dr. Baretto v. It was held that A could reject the set as the purpose for which anybody would buy it was implicitly known to the seller, here the dentist. Priest v Last 2K. Warranty of quiet possession. Section 13 b provides greater opportunity for use.
It contains a continuing warranty that the buyer will enjoy quiet possession, with a limitation period running from the date of any interference with that right. It is possible for the seller to be in breach, as in the much quoted decision of Rubicon Computer Systems Ltd v.
The facts were that the seller supplied a computer system to the defendants. During a dispute about payment, the seller, who still had access to the system, installed a time lock, which it subsequently triggered, denying the defendants access to their system.
It was held that the seller had breached the section 12 2 b the equivalent of S.
The next question left, is to ask yourself to what extent the seller can be held liable for the interference by a third party with the quiet possession of the buyer. Reason demands that the seller should not be held liable if a third party unlawfully disrupts the quiet possession of the buyer, even though that may give rise to strange situations.
Hence, it can be argued that in a nemo dat situation, the seller, who would be liable under section 13 a for not having the right to sell, should not be held liable under section 13 b if the original owner of the goods seeks to interfere with the rights of the innocent buyer who, having acted in good faith, has acquired valid title to the goods.
The seller may be liable here as long as the right that the third party is seeking to enforce existed at the time the contract was made. Compare this statement with the decision in Microbeads AG v. Warranty of freedom from encumbrances. This warranty is implied on the seller. The goods sold by the seller should be free from any charge or encumbrances in favour of any third party which was not made known to or declared to the buyer before or at the time of making the contract of sale.
The breach of this warranty will only occur when the buyer in fact discharges pays the amount of the encumbrance and he had no notice of that encumbrance at the time of making or entering into the contract of sale. Knowledge of the encumbrance by the buyer at the time of contracting can substantially discharge the seller of liability under this provision.
Warranty of disclosing the dangerous nature of goods to the ignorant buyer. In case the seller is selling goods of a dangerous nature, the law implies a warranty on them to disclose to an ignorant buyer the possible hazard such a good has on them. The buyer will therefore be entitled to claim for compensation from the seller who breaches this warranty for compensation. In Clarke v. Army and Navy Cooperative Society Ltd.
Romer J said: I think that apart from any question of warranty, there is a duty cast upon a vendor, who knows of the dangerous character of goods which he is supplying and also knows that the purchaser is not, or may not be aware of it, not to supply the goods without giving some warning to the purchaser of that danger. Other implied terms The terms set out in ss 13—15 of the Sale of Goods Act are the basic implied terms.
In principle, there seems to be no reason why the general principles about implication of terms in the general law of contract should not apply. So, if a contract of sale is made against a background of a particular trade or local custom, it will be open for one party to seek to show that the custom exists, is reasonable and contracts of sale made in this particular context are regarded by those in the trade or living in the locality as subject to this implied term. Similarly, there is no reason why a party should not seek to show that in a particular contract a term is to be implied in order to give business efficacy to the contract.
In this case there was a contract for the sale of Cyprus potatoes cif Liverpool. On arrival in Liverpool the potatoes were found to be uneatable but the evidence was that they were eatable on loading in Limassol. Diplock J said that liability turned on the reason why the potatoes were uneatable. There were various possible reasons such as bad stowage or inadequate ventilation during the voyage.
However, one possibility was that the potatoes, although eatable when shipped, were not in a fit state to withstand a normal voyage from Cyprus to Liverpool. Diplock J said that it was an implied term of the contract in the circumstances that the goods would be fit to withstand an ordinary journey. It is not mandatory for the seller to disclose every defect of his or her goods in absence of any inquiry or asking by the buyer.
The buyer should examine the goods thoroughly for his expected purpose and while doing so if he or she makes a mistake and chooses defective goods or if the goods are not suitable for his or her purpose, he or she cannot accuse the seller or cannot shift his or her own fault on the shoulder of the seller.
When a buyer takes anything depending on his skill and judgment, he himself is responsible. It is based on the judgmental premise that once a buyer ratifies himself as the suitability of the product for him, he would subsequently have no right to reject the same. Where such a buyer does not make any inquiry regarding the goods he is purchasing, the seller is not bound to disclose every defect in the goods of which he may be cognizant.
Section 15 of the Act make this clear as it states; Subject to the provisions of this Act and of any other Act in that behalf, 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… It means the seller is not bound by law to supply the goods which are fit for any particular purpose or possess any particular quality unless it fell within the exceptions under section 15 for the seller to do so.
It is the duty of the buyer to make himself acquainted with qualities and defects of the goods which he contemplates at the time of purchasing.
In Goustar Enterprises vs. The association paid a deposit of shs. Upon the supply, two of the tractors were found to be defective. The appellant brought the suit claiming a refund of shs.
The respondent averred that the tractors were tested and found suitable for use. At the trial, the defendant was ordered to deliver one of the two tractors, refund shs. Dissatisfied with the judgment an appeal was lodged and a cross-appeal filed. In the instant case the seller was given the required specifications.
The defects were seen barely two months after tractors had been supplied and yet the respondent had given the appellant a warrant of 12 months. The respondent was in breach of its contractual duty of supplying tractors fit for a particular purpose.
The common law rule that the buyer should beware or take the initiative to ascertain what he purchases is limited situations hereunder; thus the buyer shall not be construed to be ware under the following circumstances. Where the seller makes a misrepresentation and the buyer relies on it, the doctrine of caveat emptor does not apply. Such a contract being voidable at the option of the innocent party, the buyer has a right to rescind the contract.
Where the seller makes a false representation amounting to fraud and the buyer relies on it or where the seller actively conceals a defect in the goods so that the same could not be discovered on a reasonable examination, the doctrine does not apply, and the contract is voidable at the option of the buyer. He may avoid the contract and also damages for fraud. Where the goods are purchased by description and they do not correspond with such description.
Where the goods are bought by sample apply, the doctrine does not apply if the bulk does not correspond with the sample, or if the buyer is not provided an opportunity to compare the bulk with the sample or if there is any hidden or latent defect in the goods. Where the goods are bought by sample as well as by description, and the bulk of the goods does not correspond with the sample and with the description, the buyer is entitled to reject the goods and the doctrine does not apply.
Where the trade usage attaches an implies condition or warranty as to quality and fitness and the seller deviates from that the, the doctrine of caveat emptor does not apply and the seller is liable in damages.
The basic rules as to the passing of property are set out in ss 17 and 18 of the Sale of Goods Act. Section 17 deals with the passing of property in unascertained goods while section 18 deals with passing of property in ascertained goods.
It is for this reason that passing of property in goods under a sale of goods contract can be analysed under two categories; Passing of property in specific or ascertained goods; Passing of property in future or unascertained goods. Passing of property in specific or ascertained goods Section 18 1 provides that where there is a contract for the sale of specific or ascertained goods, the property in them is transferred to the buyer at such time as the parties to the contract intend it to be transferred.
Section 18 2 provides that for the purpose of ascertaining the intention of the parties, regard shall be had to the terms of the contract, the conduct of the parties and the circumstances of the case.
The intention of the parties may be to pass property at once at the time when the contract of sale is made or when the goods are delivered or when the goods are paid for. Where the intentions of the parties cannot be determined from either the contract or conduct or other circumstances, it can be determined from the rules set out in Section 19 of the Act. Rules of ascertaining the intention of the parties: Rule 1 S. Here property in the goods passes from the seller to the buyer where the contract for sale is unconditional.
Before collection, the stack was destroyed. It was held on the facts that ownership had passed to the buyer and therefore, bore the loss. The above case shows us that for goods to be in a deliverable state if they are in such a state that the buyer is bound to take them also look at S.
Like Holroyd J stated in Tarling; …if nothing remains to be done on the part of the seller, as between him and the buyer, before the thing purchased is to be delivered, the property in the goods immediately passes to the buyer, and that in the price to the seller; but if any act remains to be done on the part of the seller, then the property does not pass until that act has been done.
The case of Dennant v Skinner and Collom  2 KB is another case that can be considered on this point. At auction, a van was bought by cheque.
When paying the buyer signed a statement stating that ownership would not pass to him until the cheque was cleared. He sold the car to a third party and there was a dispute regarding ownership of the car. It was held that the contract was complete when the auctioneers hammer fell, the third party therefore had good title to the car.
Therefore the statement was made too late. The contract was to remain in force for 15 years. Forest expropriated by Latvian Government. Seller sued buyer for the price, but to succeed, had to prove that property had passed.
The seller argued that the goods were specific, and that property had passed at the time the contract was made as per s. It was held that the goods had not been identified at the time of the contract. Only trees conforming to certain measurements could be cut. This was because merchantable timber was subject to change over time as the trees grew, and there was no identification of which trees were included. Rule 2 s. The owners of a horizontal condensing engine agreed to sell it at a price free on rail in London.
It weighed thirty tons and was bolted to and embedded in a flooring of concrete. Before it could be delivered on rail it had to be detached and dismantled. The seller detached it, but in loading it on a truck they damaged it by accident, so that the buyers refused to accept it. Plaintiffs argued property passed when contract was made. It was held that that the property in the engine had not passed to the defendants.
Bankes LJ said: Did the property in that engine pass on the contract of sale? No general rule can be laid down which will answer the question when the property passes in every contract of sale. In many sales of specific articles to be delivered the property passes on the making of the contract.
A man may select and agree to buy a hat and the shop man may agree to deliver, it at the buyer's house, There notwithstanding the obligation to deliver the hat, the property passes at the time of the contract. But that is far from this case. Considering the risk and expense involved in dismantling and moving this engine, I have no hesitation in holding that the proper inference to be drawn is that the property was not to pass until the engine was safely placed on rail in London… But was this engine in a deliverable state in its position at Millwall?
The appellants contended that where a specific article is complete in itself, for example a complete engine or a complete cart-that is to say, where nothing more has to be done to make it an engine or a cart-it is then in a deliverable state within the meaning of s. I do not accept that test. A " deliverable state " does not depend upon the mere completeness of the subject matter in all its parts. It depends on the actual state of the goods at the date of the contract and the state in which they are to be delivered by the terms of the contract.
Where the vendors have to expend as much trouble and as much money as the appellants had to expend before this engine could be placed on rail, I cannot think that the subject matter can be said to be in a deliverable state. Rule 3 S. Where there is a contract for the sale of specific goods in a deliverable state, but the seller is bound to weigh, measure, test, or do some other acts or thing with reference to the goods for the purpose of ascertaining the price, the property does not pass until such act or thing be done, and the buyer has notice thereof.
However, this should be expressly stated in the contract as a condition precedent to the passing of property before the court can rule thus. The appellant consigned bags of cocoa to L.
The respondents bought and took delivery in good faith, and credited L. The appellant brought an action in the Supreme Court of the Cold Coast to recover from the respondents damages for conversion of the cocoa. It was held that the checking of the weights by the merchant was not a condition precedent to the passing of the property to L. Lord Shaw who delivered the full judgement of the court said; Their Lordships agree that the provision as to the weight of the goods being tested was not a condition precedent to a sale.
The goods were transferred, their price was fixed, and the testing was merely to see whether the goods fitted the weights as represented, but this testing was not suspensive of the contract of sale or a condition precedent to it. To effect such suspension or impose such a condition would require a clear contract between vendor and vendee to that effect.
In this case there was no contract whatsoever to carry into effect the weighing, which was simply a means to satisfy the purchaser that he had what he had bargained for and that the full price claimed per the contract was therefore due. Rule 4 S. Therefore no sale is exercised until such an option is exercised. This may be implied from the conduct of the buyer. It is not sufficient for the seller simply to show that the buyer is unable to return the goods.
Where the buyer sells or pledges the goods then this can be seen as an act of adoption. In Kirkham v Attenborough  1 QB , a jewellery manufacturer forwarded jewels to a seller on sale or return.
The seller then pledged them to a pawnbroker. Lord Lopes who was in agreement with Rigby and Esher LLJ said; The position of a person who has received goods on sale or return is that he has the option of becoming the purchaser of them, and may become so in three different ways. He may pay the price, or he may retain the goods beyond a reasonable time for their return, or he may do an act inconsistent with his being other than a purchaser.
The words of the Act are difficult to construe; but it seems to me that if the recipient of the goods retains them for an unreasonable time he does something inconsistent with the exercise of his option to return them, and thereby adopts the transaction. So if he does any other act inconsistent with their return, as if he sells them or pledges them, because if he pledges them he no longer has the free control over them so as to be in a position to return them. In all these cases he brings himself within the words of the section by adopting the transaction, and the property in the goods passes to him.
If that is the state of the law, applying it to this case, it is clear that the plaintiff is not entitled to recover from the defendant either the goods or their price, and the judgment in favour of the plaintiff cannot be supported.
Electronics Boutique stores U. They took a large number on the basis that they were given until 31 January to return them. On 19 January , they gave notice that sales were unsatisfactory and that they were arranging for the unsold games to be brought to a central location for return. This was held to be an effective notice, even though the games to be returned were not specifically identified or ready for immediate return.
If also, the buyer does not signify approval or acceptance, property passes when he retains the goods beyond the agreed time or if no time was agreed, beyond a reasonable time. In Poole v. It was held that since the car had not been returned within a reasonable time the property in it has passed to the buyer and he was accordingly liable to pay the price agreed. Passing of property in unascertained goods. In the sale of unascertained goods, property cannot pass until the goods are ascertained, even if the parties were to try to agree otherwise.
The default rule in S. Such assent may be express or implied, and may be given either before or after the appropriation is made. In this case, tons of wheat were sold from a cargo of tons that was on board a ship, Challenger. When the seller went into liquidation, the court held that the sale was of unascertained goods and so under [s. The buyer could not, therefore, claim the goods and merely joined the other general creditors.
In this case, a New Zealand company dealt in gold and sold to customers on the basis that the company would store and insure the gold free of charge. They issued certificates to the customers. In fact, the company became hopelessly insolvent and had inadequate supplies of gold. The Privy Council held that it was elementary that property had not passed from the sellers to the buyers because the company was free to decide what bullion to allocate to a particular investor.
In this case, wine merchants bought and sold wine and also sold it on the basis that they would store it for customers until it was fit to drink.
In this case, the wine merchant kept the boxes of wine which they were holding for customers in a separate unit. The wine merchants became insolvent.
In this case, it was held that the wine was sufficiently ascertained for the customers to become tenants in common of the stock in the proportion that their goods bore to the total in store for the time being.
This decision is very important because it shows that the ascertainment rule does not prevent two or more owning goods in common where there is an undivided bulk. Ascertainment usually flows from the act of one or both parties to the contract or someone designated by them. It may also be automatic that is where goods are capable of prospective identification.
Ascertainment must be brought to the knowledge of the buyer. In some cases, ascertainment and appropriation may take place at the same time. This was so in Karlshamns Oljefabriker v. The ship called at Rotterdam and at Hamburg on its way to Sweden and 16, tons were unloaded at these two ports.
It was held that these 6, tons for Sweden became ascertained at the end of unloading in Hamburg. This is quite likely to be the case where the goods are appropriated by delivery to a carrier as happens, particularly in international sales though in such sales there are often express agreements as to the passing of property. So, if the seller contracts to sell 1, tons Western White Wheat cost, insurance and freight cif Avonmouth and puts 1, tons of Western White Wheat aboard a ship bound for Avonmouth this may both ascertain and appropriate the goods.
In many such cases, however, the seller will load 2, tons having sold 1, tons to A and 1, tons to B. Even where the seller puts only 1, tons on board this will not necessarily constitute appropriation because he may not at that stage have committed himself to using that 1, tons to perform that contract. The seller then went insolvent. The buyer argued that the bicycles had been appropriated to its contract and that property had passed to it.
This argument was rejected on the grounds that the seller could properly have had a change of mind and appropriated new bicycles to the contract. It is essential that there is a degree of irrevocability in the appropriation. It is this which makes delivery to the carrier often the effective act of appropriation.
However, the party may only rely on such a clause if a it has been incorporated into the contract, and if, b as a matter of interpretation, it extends to the loss in question. Section 54 of the sale of goods Act provides that where any right, duty or liability would arise under a contract of sale by implication of law, it may be negatived or varied by express agreement or by the course of dealing between the parties, or by usage, if the usage is such as to bind both parties to the contract.
And S. They usually exist in standard contracts. Incorporation; The party relying on an exclusion clause must show that it formed part of the contract. An exclusion clause can be incorporated in the contract by signature, by notice or by course of dealing. Signed documents: If the party signs a document having contractual effect containing an exclusion clause, it will automatically form part of the contract, and he is bound by its terms. This is so even if he has not read the document and regardless of whether he understands it or not.
In L'Estrange v Graucob  2 KB the claimant purchased a cigarette vending machine for use in her cafe. The vending machine did not work and the claimant sought to reject it under the Sale of Goods Act for not being of merchantable quality.
It was held that in signing the order form she was bound by all the terms contained in the form irrespective of whether she had read the form or not. Consequently her claim was unsuccessful.
However, even a signed document can be rendered wholly or partly ineffective if the other party has made a misrepresentation as to its effect. By Notice: The seller must show that the buyer had reasonable notice of the existence of the clause and that it was intended to be an integral part of the contract. Notice depends on the interpretation of the contract.
The contract was made at the reception desk where there was no mention of an exclusion clause. In the hotel room on the back of the door a notice sought to exclude liability of the hotel proprietors for any lost, stolen or damaged property.
The claimant had her fur coat stolen. It was held that the notice was ineffective. The contract had already been made by the time the claimant had seen the notice. It did not therefore form part of the contract. The railway company displayed prominent notices on the platforms excluding liability personal injury and damage to property due to negligence.
The tickets also stated they were subject to terms and conditions displayed on the platform. The claimant was illiterate and could not read the signs. She argued that the exclusion clause was not incorporated into the contract as the railway company had not brought the clause to her attention at the time the contract was made.
It was held that the clause was incorporated. There is only a requirement to take reasonable steps to bring the clause to the attention of a reasonable person. There was no duty to ensure that every traveler was aware of the clause. The claimant was therefore unsuccessful in her claim for damages. What is reasonable is a question of fact depending on all the circumstances and the situation of the parties.
The courts have repeatedly held that attention should be drawn to the existence of exclusion clauses by clear words on the front of any document delivered to the plaintiff, e. It seems that the degree of notice required may increase according to the gravity or unusualness of the clause in question. By course of dealing between the parties: The parties may raise an implication that certain terms are or are not to be included in the contract if these have or have not implied on previous occasions.
The party relying on the past dealing defence must prove to court they have been a consistent course of dealing in which the same terms have been regularly incorporated in the past.
The claimant had used the car ferry on a few occasions previously. Sometimes he had been asked to sign a document containing an exclusion clause sometimes he had not been asked to sign a form.
On this occasion he had not been asked to sign a document. The defendant sought to rely on the exclusion clause claiming it had been incorporated through previous dealings. It was held that there was no consistency in the course of dealings and therefore the clause was not incorporated.
The defendant was liable to pay damages. In Hollier v Rambler Motors  2 WLR , the claimant had used the services of the defendant garage on occasions over a five year period. Each time he had been asked to sign a document excluding liability for any damage.
On this occasion the contract was made over the phone and no reference to the exclusion clause was made. The garage damaged the car during the repair work and sought to invoke the exclusion clause through previous dealings.
It was held that there was not a sufficient number of or regularity of transactions to amount to a previous course of dealings capable of incorporating the exclusion clause. It was not reasonable to expect the claimant to remember the clause from one transaction to the next. Consequently the garage was liable to pay for the damage.
Limitations imposed by the common law on the effectiveness of exemption clauses. The principal tool used by common law to control exemption clauses has been the process of construction, that is, the process by which the court construes decides the meaning of the contract. Courts have traditionally approached this process of construction by making a number of assumptions.
These assumptions may often overlap but are probably analytically distinct. The thrust of both of these assumptions is that, if one party wishes to exclude its liability for negligence or a serious breach of the contract, it needs to say so in clear terms. A third assumption which overlaps with these two but may have separate application is the contra proferentem principle, which says that, if one party has drafted or is responsible for the drafting of a document and the document is ambiguous, then any ambiguities should be resolved in favour of the other party.
It has also been said that, where one party has only entered into the contract because she has been misled by the other about the effect of the exclusion clauses, then the exclusion clauses are without effect. This principle would obviously apply where the misrepresentation was fraudulent but it seems to apply even if the misrepresentation was entirely innocent see Curtis v Chemical Cleaning and Dyeing Co It is not clear whether the principle that surprising clauses should be specifically drawn to the attention of the other party applies where the document is signed.
The cases in which it has arisen have not been cases of signed documents but the underlying rationale would seem to be equally applicable in such a case. The principal tool used to allocate the loss which arises where the goods are damaged or destroyed after the contract is made is the doctrine of risk. This is a special doctrine developed for the law of sale, unlike the doctrine of frustration which is a general doctrine of the law of contract.
The parties can and frequently do separate the passing of risk and property. So, in standard conditions of sale, the seller will often provide that risk is to pass on delivery but that property is not to pass until the goods have been paid for.
This is because the seller does not wish to be bothered with insuring the goods once he or she has delivered them, but is anxious to retain ownership of the goods as security against not being paid in full.
There seem, however, to be at least two kinds of case where risk may pass at a different time from property even though there is no expressed or implied agreement. As we have seen, property cannot pass in such a case until the goods are ascertained. However, there may be cases where property is not ascertained because the goods form part of an unascertained bulk but, nevertheless, fairness requires that risk should pass.
The classic example is Sterns Ltd v Vickers Ltd  1 KB 78, where the sellers had some , gallons of white spirit in a tank belonging to a storage company. They sold to the buyers some , gallons of the spirit and gave the buyers a delivery warrant. The effect of the delivery warrant was that the storage company undertook to deliver the white spirit to the buyers or as the buyers might order. In fact, the buyers sub-sold, but the sub-purchaser did not wish to take possession of the spirit at once and arranged with the storage company to store it on his behalf, paying rent for the storage.
Clearly, although there had been a sale and a sub-sale, ownership was still in the hands of the original sellers since the goods were still unascertained. While the bulk was unseparated, the spirit deteriorated. The Court of Appeal held that although there was no agreement between the parties, the risk had passed as between the original seller and buyer to the buyer.
The reason for this was that as soon as the buyers had the delivery warrant, they were immediately able to obtain delivery of the spirit and therefore risk should pass to them even though they chose not to take immediate possession of the goods.
The second situation is illustrated by the case of Head v. Tattersall LR 7 EX 7. In this case, the plaintiff bought a horse from the defendant who warranted that it had been hunted with the Bicester hounds. The contract provided that the horse might be returned by a certain day if it appeared that it had not in fact been hunted with the Bicester hounds. The horse had in fact not been hunted with the hounds and the plaintiff chose to return it before the agreed date.
The court held that the plaintiff was entitled to return the horse. Cleasby B expressly stated that property had passed to the plaintiff and then revested in the defendant.
The same conclusion is implicit in the other two judgments. The general rule stated in s 21 of the Sale of Goods Act is subject to the qualifications contained in sub-ss a and b.
Sub-section a means that if the seller is late in making the delivery or the buyer is late in accepting delivery, this may mean that the incidence of risk is different from what it would otherwise have been. This would be so, however, only if the loss is one which might not have occurred if delivery had not been delayed.
However, the onus will be on the party who is in delay to show that the loss would have happened in any event. Sub-section b is really no more than a specific example of the general principle that the passing of risk is to do with the allocation of the risk of damage which is not the fault of either party. We should also note s 33 of the Sale of Goods Act, which provides: Where the seller of goods agrees to deliver them at his own risk at a place other than that where they are when sold, the buyer must nevertheless unless otherwise agreed take any risk of deterioration in the goods necessarily incident to the course of transit.
What is the effect of the passing of risk? It is important to emphasise that the doctrine of risk does not operate to bring the contract of sale to an end. It may, however, release one party from their obligations under the contract. In some cases where the goods are damaged, this would be the fault of a third party and that third party may be liable to be sued. The doctrine of frustration The doctrine of frustration is part of the general law of contract.
In principle, there can be no doubt that this doctrine applies to contracts for the sale of goods like any other contract. When does the doctrine of frustration apply? Section 8 of the Act contains a provision which deals expressly with frustration. This provides: Where there is an agreement to sell specific goods and subsequently the goods, without any fault on the part of the seller or buyer, perish before the risk passes to the buyer, the agreement is avoided.
This section is clearly a very incomplete statement of the doctrine of frustration as applied to contracts of sale. It deals only with specific goods and it deals only with goods which perish, whereas frustration may involve many other events than the destruction of the goods.
For instance, where goods are sold internationally, there is often a requirement to obtain an export or import licence. Failure to obtain such a licence would not normally be a frustrating event because the parties would know at the time of the contract that the licence was required and the contract would often expressly or impliedly require one of the parties to obtain or at least to use their best endeavours to obtain the licence.
There might be plausible arguments in such a case that the contract was frustrated. It is also possible to argue that a contract for the sale of unascertained goods is frustrated, but of course such goods cannot usually perish except for the special case of sale of part of a bulk as discussed below.
In practice, the courts, although admitting the possibility that sales of unascertained goods can be frustrated, have been very slow in fact to hold them frustrated. In Howell v Coupland 1 QBD , a farmer sold in March for delivery upon harvesting the following autumn, tons of potatoes to come from his farm.
In fact, only 80 tons were harvested. The buyer accepted delivery of the 80 tons and brought an action for damages for non-delivery of the balance of tons. It was held that the unforeseen potato blight which had affected the crop released the seller from his obligation to deliver any more than had in fact been grown.
It should be noted that in fact the buyer was perfectly happy to accept and pay for the 80 tons; it was certainly arguable that if the potato blight released the seller, it also released the buyer from any obligation to take the potatoes at all.
Obviously, there could be commercial situations in which if the buyer could not obtain the full tons from one source, it was perfectly reasonable of him to refuse to accept any delivery at all.
The case does not decide that a buyer could not elect to do this. The defendant argued that the contract was frustrated and sold the tons to another merchant. The reason no doubt being that, because of the generally poor harvest, barley prices were higher than expected and the defendant was then able to get a better price from another merchant. McKenna J held that the farmer was in breach of contract by not delivering the tons which had actually been harvested, although the bad harvest did relieve him of any obligation to deliver the balance of tons.
Again, it should be noted that in this case the buyer was willing and indeed anxious to take the tons and the case does not therefore decide that the buyer in such a case was bound to take the tons, although the doctrine of frustration where it operates, does normally operate to release both parties from future performance of the contract.
The effect of frustration If a frustrating event takes place, its effect is to bring the contract to an end at once and relieve both parties from any further obligation to perform the contract. This is so, even though the frustrating event usually only makes it impossible for one party to perform. This rule is easy to apply where the contract is frustrated before either party has done anything to perform it, but the contract is often frustrated after some acts of performance have taken place.
At common law, it was eventually held in the leading case of Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd  UKHL 4, that if a buyer had paid in advance for the goods, he could recover the advance payment in full if no goods at all had been delivered before the contract was frustrated. If there was a partial failure of consideration, that is, if the buyer had received some of the goods, then it would not have been able to recover an advance payment of the price even though the advance payment was significantly greater than the value of the goods which it had received.
This, obviously, appears unfair on the buyer. The decision in the Fibrosacase was also potentially unfair on the seller. In light of this case, the law on frustration is need of immediate amendment in order to give the courts a wider discretion to order repayment of prices which had been paid in advance or to award compensation to a seller who had incurred wasted expenditure before the contract was frustrated. This situation may arise in a range of cases running from the situation where the seller has stolen the goods all the way to a case where the seller honestly believes that he is the owner of the goods but has himself been misled by a previous seller.
In this type of case there is a conflict of interest between that of the original owner of the goods who is seeking to recover them or their value and the ultimate buyer who has paid good money for goods which he believed the seller was entitled to sell to him.
Delivery of the Goods Delivery concurrent with payment. Time of delivery. Cost of putting goods into deliverable state. Means of delivery. Place of delivery. Despatch of goods by carrier. Fundamental obligations of the buyer. Payment concurrent with delivery. Time of payment and accepting delivery. Buyer not bound to accept delivery by instalments. Goods must be ascertained.
When property passes. Transfer of Risk Transfer of risk. Transfer of Property by a Non-owner Non-owner cannot generally pass good title. Disposition under voidable title. Disposition by merchantile agent in possession of goods. Disposition by seller in possession. Disposition by buyer in possession. Provisions relating to n otice of ownership. Remedies of the Seller Real Rights of Seller Unpaid seller defined.
Lien Termination of lien. Stoppage in Transit Stoppage in transit. Duration of transit. How stoppage in transit is effected. Position as between seller and carrier. Stoppage over goods lost or damaged.
Effect of resale or other disposition by buyer. Recovery of Possession from Buyer Resale Resale by seller. Personal Rights of the Seller Action for price. Damages for non-acceptance. Assessment of damages.