LAW OF SALE OF

GOODS

MUSIIMENTA ALEX
 LAW OF SALE OF GOODS CLASS NOTES UNDER
THE SALE OF GOODS & SUPPLY OF SERVICE
ACT 2017
Table of contents

Contents
1. Interpretation/ Definition
Elements of the definition
Contract of sale and supply of services
Characteristics of a contract of sale
Distinction between a Sale and agreement to sell goods
2. Goods
Types of Goods
3. Distinction between a contract of sale and other kinds of contracts
4. Formalities of contract
The subject matter of the contract of sale
5. Terms of Contract
Implied terms
express terms
6. Implied Warranties
7. Exclusion/Exemption Clauses
8. Types of Exclusion Clauses
9. Terms which must be incorporated
a) By Signature
b) By Notice
c) By course of dealings
10. Interpretation of Exclusion Clauses
Strict Literal Interpretation
11. Contra Proferentem Rule
12. Nemo dat Qoud Non Habet
Exceptions

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13. Doctrine of Caveat Emptor
Exceptions
14. Transfer of Property
15. Rules Regulating Transfer of Property
16. Risk And Frustration
17. Performance of a contract
Obligation of the parties
18. Duties of a seller
Delivery
Methods of Delivery
Rules of Delivery
19. Duties of the a Buyer
20. Remedies of Unpaid Seller
21. Rights of the Buyer
22. Remedies for the Buyer

1. DEFINITION

1.The Uganda Law of Sale of Goods is Reciplica of the English Sale of

goods Act1898

Definition of a Contract of sale of goods-

Section 2(1) Is a contract by which the seller transfers or agrees to

transfer the property in the goods to the buyer for a money consideration
called the price.

ELEMENTS OF THE DEFINITION

The legal consequences of the above definition are as follows:

• A sale of goods is "a contract". Though Part II of the Act bears the
heading "formation of the contract" there is nothing in it which
regulates the actual formation of the contract of sale of goods. It
therefore appears reasonable to assume that the contract envisaged
by the Act is to be formed according to the rules which govern the

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 formation of contracts in general, namely, the rules of the common
law. Consequently, before a sale of goods can take place:

• There must be an offer to buy, or sell, followed by a corresponding

acceptance.

• All the other conditions prescribed by the common law for the validity
of a contract must be met. However, s.6 provides that a contract for
the sale of goods worth two hundred shillings or more must be entered
into, or evidenced, in writing, otherwise the contract is unenforceable.

(b) The contract effects a transfer of "the property in the goods"

delineated by it to the buyer.

(i) Where the transfer is immediate, the contract constitutes "a

sale".

(ii) Where the transfer is delayed, the contract constitutes "an

agreement to sell."

"The property in goods" in this context means "the ownership of the goods"
sold or agreed to be sold. In effect what the buyer pays for is not the physical
goods but the right to own them. As soon as he has acquired the ownership
he will be in a position to do anything he pleases—usually taking possession
of them or reselling them.

(c) The consideration for the transfer of ownership must be "a money
consideration". This means that a barter is not a "sale" of goods.
It is an exchange of goods since no "money" (cash or cheque) is
paid by either party.

In Aldridge v Johnson an agreement provided for the exchange of 52

bullocks with 100 quarters of barley, the difference in their value being
payable in cash. It was held that the agreement constituted a sale of goods
within the statutory definition. The money paid by the one party would be
regarded as the "money consideration" for the goods delivered or to be
delivered by the other party. The apparent inadequacy of the consideration
is, of course, legally irrelevant. In any case the owner of the goods must be
assumed to know what he is doing.

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 (d) The provision that the property in the goods is "transferred"
means that there must be two different parties to the contract.
Consequently, a person cannot sell goods to himself—although it
appears probable that he can do so in two distinct capacities.
However, there may be a sale by a "part-owner" of the goods.

Case Law; Gulham Kadir v British Overseas Engineering Corp.EA

1957 EA 131 –Held;so where property in the goods is transferred from
the seller to the buyer, the contract constitutes a sale.

NB.Where the transfer of the property is to happen in future then that is

an agreement to sell.

Characteristics of a Contract for Sale

• There must be 2 distinct parties. A buyer and a seller.

• Ther must be a transfer of Property.ie the seller must own(title) the

goods

• The subject matter of the contract must be goods eg chattels, every

kind of movable and immovable property,

• The consideration must be money called the price

NB. A if its goods in exchange for goods then its barter trade not
contract for sale.

B. Contract of sale includes both” a sale” and “ agreement to

sell”

Distinction between Sale and Agreement to Sell

1. SEC 2(4) of the Sale of goods and supply of services Act,

2018 provides that where, under a contract of sale, the
property in the goods is transferred from the seller to the buyer,
the contract is called a sale while;
2. SEC 2(5) of the Sale of goods and supply of services Act,
2018 provides that where the transfer of the property in the

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 goods is to take place at a future time or subject to conditions
to be fulfilled after the making of the contract, the contract is
called an agreement to sell.

Case Law Wamala Growers Coperative Union v Attorney General

1977 111kalr 73

1.Transfer of Property-In sale there is immediate transfer of goods

from seller to buyer. There is conveyance WHERE AS IN agreement
to sell the transfer is at a future date or subject to some conditions.

2.Risk of Loss-The general rule is the risk passes with the goods.In
sale ,the buyer carries the risk upon conveyance WHERE AS in
agreement to sell,the risk remains with the seller because the sale
has not yet occurred.

3.Consequence of Breach-In sale in case buyer does not pay up full

price,the seller can sue for price even though goods are in his
procession WHERE AS in agreement to sell the seller can only sue
for damages even though goods are in custody of buyer.Because the
goods are still property of the seller.

4.Right of Resale-In sale even if the property is still in hands of the

seller,he has no right of re-sale and whoever buys wont have good
title of the goods because the goods wre property of the buyer
WHERE AS in sell agreement the right to resale is with the seller
because he still owns the goods. incase he resale’s them the buyer
can sue him only for breach of contract.

5.Bankruptcy and Insolvency of the Buyer before he pays for the

goods-in sale in case of bankruptcy,the seller has to pass onn the
goods to the official reciver and only claim as a creditor WHERE AS
in agreement to sell the seller is not bound to deliver the goods
because he still has title to the goods.

DISTINCTION BETWEEN SALE AND AN AGREEMENT TO SELL

SALE AGREEMENT TO SELL
1. Property in the goods passes 1. No transfer of property, the
immediately at the time of making conveyance takes place later so that
the contract the seller continues to be the owner

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 until the agreement to sell becomes
a sale
2. In case of destruction of the 2. If the goods are destroyed the
goods the risk passes to the buyers loss, as a rule, falls on the seller.
immediately, it is immaterial that
the goods were in the sellers
possession
3. If the buyer neglects to pay, the 3. If the buyer fails to accept and
seller can sue for the goods even pay for the goods, the seller can only
though the goods are still in the in sue for the damages and not the
his possession price
4. The property is with the buyer, 4. The property in the goods
therefore, the seller who is in remains with the seller and as such,
possession of the goods cannot he can dispose off the goods as he
resell them likes, and the original buyer can
only sue him for a breach of the
contract
5. If the seller is adjudged 5. If the buyer has already paid for
insolvent, the buyer the buyer who the goods, and the seller is adjudged
has already paid the price is insolvent, the buyer can only claim
entitled to recover the goods from a rateable dividend (as a creditor)
the Official Receiver or Assignee as and not the goods because the
the property in the goods rests with property in the goods still remains
the buyer. with the seller.
6. If the buyer is adjudged 6. The seller can or may refuse to
insolvent before he pays for the deliver the goods to the Official
goods, the seller, in the absence of Receiver/Assignee unless paid for
a “right of lien” must deliver the as ownership has not yet passed to
goods to the Official Receiver. The the buyer.
seller is entitled to a rateable
dividend for the price of the goods.

2.GOODS

Definition- SEC 1 of the Sale of goods and supply of services

Act, 2018 defines goods to include;

• All things and personal chattels, including specially

manufactured goods, which are movable at the time of
identification to the contract of le other than the money

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 representing the price, investment securities and things in
action;

• Emblements, growing crops, unborn young of animals and

things to or forming part of the land which are agreed to be
severed before sale or under the contract of sale;

• Computer software; and

• Un divided share in goods held in common.

Sub-categories of Personal Chattels-.includes things in

procession and things in person.

Things in procession are tangible things that can move while

things in action are choses in action eg copyrights,patents,shares
etc..

NB.The law of sale of Goods does not deal with things in action but
deals with things in procession.

The section includes things like animals, human remains,

intellectual and electronic soft ware etc``

Money is not part of goods as provided in the section but however

case law has included money as goods.see Moss v Hancock 1899 2
qb 111 –where money was given to another as curiaeg
souvenir such as old coins.

TYPE OF GOODS

The Act classifies goods into:

Specific Goods
Specific goods are "goods" which are identified and agreed upon at the time
the contract of sale is made. This definition embraces nearly all the goods
which people buy in shops, market places and super-markets.

Unascertained Goods
These are goods which are neither indicated by description nor

separately identified.

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Existing Goods

Existing goods are goods owned and possessed by the seller when the
contract of sale is made.

Future Goods
Future goods are goods to be acquired or manufactured by the seller after
the contract is made.

3. DISTICTION BETWEEN A CONTRACT OF SALE AND OTHER

KINDS OF CONTRACTS

1. Contract of Sale AND supply of labor and Services-A contract

of supply of services includes supply of skill and labor as well as
raw materilas.The Sale of goods and supply of services Act, 2018
does not apply to contracts for work and materials.

However a contract of sale may have some labor on part of the

seller.

Case Law; Love v Norman Wright Buliders 1944 ALLER 618- a

contract for making and fixing curtains in a house is a contract of
sale of goods though it involves some work and labour in fixing the
same.

Case Law-Sultan v J.B Morgan 1960 EA 434- facts-car was taken

to garage for fixing items and repair.Held though claim is presented
for goods sold and work done.The contract was for hire of work and
labour.Since the work was poorly done,the defendant is not laible
to pay.

2. Contract of Sale and Barter Trade-Under contract of sale the

consideration must be money SEC 2(1) which is called the Price

Case Law,Moss v Hancock 1899 court held;that since barter

trade is an exchange of goods for goods then its not a contract of
sale.

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Where consideration for transfer consists of partly goods and
party money than it’s a contract of sale. Case Law;Aldridge v
Johnson 1957- involved contract for exchange of 52 bullocks with
100 quarters of barley and the difference was paid out in
money.court held it was a contract of sale.

3. Contract of sale and contract of bailment-Contract of

bailment goods are delivered by one party known as bailor to
another who is a bailee to hold the goods and ultimately re-deliver
them to the bailor in accordance with the given instructions.In
bailment,property in the goods is not intended to pass and does not
pass on delivery of the goods.

Case Law Chapman Bros v Verco Bros 1933-farmers delivered

wheat to milling company iin identical bags of other
farmers.transaction was that the miller could buy on request of
farmers.faliure it had to be returned.there was no obligation to
return same bags.Held;it was contract of sale not bailment because
delivery and ownership of good passed on delivery.

4.Contract of Sale and Hire Purchase. A contract of hire

purchase is bailment of goods with option of purchase which may
be exercised or not. A contract of hire purchase resembles contract
of sale but with distinct terms.

Case Law,Helby v Mathews 1895,the owner of the piano agreed to

let it on hire purchase ,the hirer to pay monthly installments. The
hirer didn’t fulfill the promise and gave out the piano as security for
a loan.Held;hirer was entitled to recover the piano.

Major purporse of Hire purchase agreements is to give the

seller a degree of security since goods are delivered before
payment.

DIFFERENCE BETWEEN CONTRACT OF SALE AND HIRE

PURCHASE

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1. In sale buyer acquires possession of goods (good title) where as
in hire purchase goods remain property of seller (hirer) until full
payment.

2. In sale, property passes to the buyer upon making agreement

WHERE AS in hire purchase its upon payment of last installment.

3. In sale the buyer cannot terminate the contract and is bound to

pay the price WHERE AS in hire purchase contract can be
terminated by

return of goods to hire.

4. In sale the seller takes the risk of insolvency of the buyer HERE
AS in hire purchase no risk is taken.faliure to pay last installment,
the hirer repossesses the goods.

4. FORMALITIES OF A CONTRACT

SEC 5 of the Sale of goods and supply of services Act, 2018, a

contract of sale may be made in writing, or by word of mouth, or
partly in writing and partly by word of mouth, or in the form of a
data message, or may be implied from the conduct of the parties.
See case law;Hillas v Acros

Hillas and co.agreed to purchase goods from Arcos in 1930 and

deal went on well BUT a clause had been put in agreement for
further purchase in 119311 though not details of quantity and
quality were put. seller said clause was not binding .Held, clause
was binding.

THE SUBJECT MATTER OF THE CONTRACT OF SALE

SEC 6, 7, 8 of the Sale of goods and supply of services Act,

2018 provides that the subject matter of a contact are goods.

Condtions may either be express or implied.They are express when

written and implied tharough conduct

It should be noted that implied condtions and warranties might

negative or varied by express agreement or by course of dealing

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 between parties or usage of particular trade.this is application of
general law maxim “what is expressly done puts an end to what is
tacit or implied and custom and agreement over rule implied
conditions and warranties”

5.TERMS OF CONTRACT
The terms of a contract of a sale of goods are the same as the terms of other
contracts.
They are governed by the common law which relies on the intention
of the parties as the basis of their classification

IMPLIED TERMS

Although the parties agree to the contract, normally the seller

determines the terms of the contract, however the law incorporates
implied terms that may not be stated in the contract and are meant
to protect the buyer.

i) Right to sell by the seller-The seller must have title to the

goods’ SEC 13 of the Sale of goods and supply of services Act,
2018.

In case the title of the seller is defective, the buyer is entitled to

recover the price paid.

ii) implied term, that if the sale is by description., the

description must be similar with the bulk.-as provided by SEC
14 of the Sale of goods and supply of services Act, 2018

Case Law;Varley v Whippe-seller supply second hand reaping

machine which is told its new and harly used. on delivery the buyer
refuses to accept it and pay for it because it was very old

Held-no sale was done.

In Nichol v Godts (1854)

The plaintiff agreed to sell to the defendants some oil which was described
as "foreign refined rape oil, warranted only to equal sample". He delivered
oil equal to the quality sample but which was not "foreign refined rape oil".
It was held that the defendant was entitled to reject the goods.

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 iii) implied term as to fitness for purposes SEC 15 of the Sale
of goods and supply of services Act, 2018 -its implies that the
goods meet the standards that the buyer expects to use them for.

The following conditions should be satisfied.

a) the buyer should the seller know the purpose for which the
goods are required for.

b) The buyer should rely on the seller skill and judgment.

c) the goods should be in the description that the seller deals with
in his normal course of dealings.

Case law;Andrew Yule v Company 1932-buyer ordered for

packing cloth without specifying purpose. Seller supplied it but it
was not suitable for food packing.Held-seller was not laible because
the buyer didn’t specify.

iv) Where sale is by sample, bulk must be similar to sample-

SEC 17 of the Sale of goods and supply of services Act, 2018
provides that sample must be similar to sample in quality.

Case law;Lorymer v Smith 1822-two parcels were sold by

sample(wheat) buyer went to examine the sample and seller showed
him only one.seller refused to show him the 2nd one.Held ;buyer
had right to rescind the contract.

v)Where goods are sold in sample, bulk must correspond to

sample and description.

If a sale is by sample and description the goods supplied must correspond

with both the sample and the description

• Opportunity to compare bulk and sample

That the buyer will have a reasonable opportunity of comparing the
bulk with the sample:

• Goods free from defect rendering them unmerchantable

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That the goods will be, free from any defect rendering them
unmerchantable which would not be apparent on a reasonable
examination of sample.

Liability for breach of this condition is illustrated by Godley v Perry in

which the plaintiff, a boy of six, bought a plastic catapult from the
defendant, a stationer. He used the catapult properly but it broke in his
hands and part of it ruptured his eye. The evidence showed that the
catapult had a defect which was not discoverable on a reasonable
examination of it.

vi)Implied terms as to the merchantability-this is implied where

sale is by description-merchantable quality-means goods are of
such quality a reasonable man would accept in case of his offer to
buy them.

Further conditions must be satisfied

A) The seller should be a dealer in those prescribed goods

B) The buyer must not have the opportunity to examine the goods.

NB if the buyer inspected the goods then the above implied

condition does not apply.

6. IMPLIED WARRANTIES

Unless expressly agreed, the law incorporates the following

warranties in a contract of sales of goods.

1. WARRANT OF QUEIT POSSESSION S.13(2)(b) SOG

In every contract, there is an implied warrant on the part of the

seller that the buyer shall have to enjoy quiet possession of the
goods. If quiet procession is anyway disturbed by a person having a
superior right than the seller, the buyer can claim damages from
the seller.

Case law;Micobeads AG v Vinhurst Road Marketiong Ltd 1975 1

WLR 218

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In January 1970 the sellers sold a number of road marking machines to the
buyer. Unknown to both parties, another company was in the process of
patenting their own road marking apparatus under the Patents Act which
gave them rights to enforce the patent from November 1970. In 1972 the
patentee sued the buyer for using the road marking machines in breach of
patent. The buyers then claimed against the sellers for breach of implied
condition as title and breach of the implied warranty as to quiet possession.
It was held that:

(a)There was no breach of the implied condition since at the time of the sale
the sellers could not have been prevented by injunction from selling the
goods, but

(b)There was a breach of the implied warranty as to quiet possession. Lord

Denning explained
that the warranty is a continuing warranty which applies not just at the
time of the sale but
also in the future.

2. WARRANT OF FREEDOM FROM ENCUMBRANCES S.13(2)(a)

SOG

This means goods will be free from any charge or encumbrance.

3. WARRRANT OF DISCLOSING THE DANGEROUS NATURE OF

THE GOODS TO THE IGNORANT

The warrant in case the goods sold are of dangerous nature ,he
will warn the ignorant buyer of possible danger.

Case law,Clarke v Army & Navy Co-operative Society Ltd 1903

1 KB 155 Held; apart from warrant,there is a duty cast on the
seller to disclose the dangerous character of the goods.

7. EXCLUSION/EXEMPTION CLAUSES

Definition-this is a term in a contract that seeks to restrict the

rights of the parties to the contract. The main purpose of

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exclusions is to negative the terms which would normally be
implied in favor of a buyer.

Traditionally, courts have sought to limit the operation of

exclusion clauses. In addition to numerous common law rules
limiting their operation.

For an exclusion clause to be enforceable, certain conditions

must be met.

-is must be validly incorporated in the contract, and

-its meaning must be clear, and match the nature of the defense to
which it is to be put, and-

-it must not be prevented by statute, and

-the contract must remain sufficiently intact that the clause still
has some legal force; however, it is increasingly difficult to rely on
fundamental breach of contract to invalidate an exclusion clause.

NB.if a seller relies on an exclusion clause, he will have to show

that the clause was incorporated in to the contract that it was part
of his offer which was accepted by the buyer. this can be in 2 ways.

1.That the buyer has signed a contract incorporating the clause.

2.That the clause was brought to the attention of the buyer.

8. TYPES OF EXCLUSION CLAUSE

1. True Exclusion Clause-The clause recognizes a potential breach

of contract and then excuses liability for breach. Alternatively, the
clause is constructed in such a way it only includes reasonable
care to perform duties on one of the parties.

2. Limitation Clause-The clause places a limit on the amount that

can be claimed for a breach of a contract, regardless of actual loss.

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3. Time Limitation-The clause states that action for claim must
be commenced in a prescribed time or cause of action becomes
exgutished.

9. TERMS WHICH MUST BE INCOPRATED

Courts traditionally held that exclusion clauses only operate when

they are terms of the contract. when the clause is part of the
contract. It may be incorporated in 3 ways.

A)by signature b)by notice c) by course of dealings

A) INCORPORATION BY SIGNATURE

This is explained in the case of l’Estrange v Graucob 1934 2 KB

394

Where the plaintiff signed a contract and purchased a slot

machine. The agreement has had a clause excluding warranties of
service. the woman was to pay in instalments,she stopped to pay
when the machine jammed to work. yet the agreement had
exclusion clauses for warranties in small print. she went to court.
Held ;that the sellers had not brought the clauses to her attention
thus she was not bound to pay BUT on appeal it was Held-that it
was immaterial whether she read them or not,since she signed in
absence of fraud/misrepresentation,she was laible to pay.

General Rule-Parker v South Eastern Railway Co.2 CPD

416,421 which has been read by my learned brother,to the
effect tthat where a party has signed a written agreement it is
immertial to the question of his liability under it that he has
not read it and does not know its contents.That is true in any
case in which the agreement is held to be agreement in
writing.

B) INCORPRATION BY NOTICE

In reference to the above rule in case of Parker v South Eastern

Railway Co.2 CPD 416,421 trila judge said that an individual can

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not escape a contractual term by failing to read the contract but
that a party wanting to rely on an exclusion clause must take
reasonable steps to bring it to the attention of the customer.

Court of Appeal held that there should be a retrial.They said that if

mr.powel knew of the condtions he would be bound.if he did not
know,he would still be bound if he was given a ticket in such a way
amounted to reasonable notice.Melish LJ said.

C) INCORPRATION BY PREVIOUS COURSE OF DEALINGS

According to Mccutcheon v David MacBrayane Ltd 1964 1 WLR 125

terms (including exclusion clauses) may be incoprated in to a
contract if course of dealingsbetween parties were regular and
consistent .What this means usually depends on the facts,however
the courts have indicated that equality of bargaining power between
the parties may be taken in to account.

Mccutcheon v David MacBrayane Ltd 1964 1 WLR 125 is an

English contract law case concerning the incorporation of a term
through a course of dealings.David’s ferry sank losing the plantiffs
car enroute between islay and the mainland.Usually David would
have got its customers to sign a risk note.

The claimants brother in law Mcsporran had made the shipping

arrangements and he did not signthe rsik note though the claimant
had signed a risk note on four occasions and Mcsporran has also
done so some times before.David argued that even though it was
not signed,the term letting mr mcutcheon assume the risk of an
accident had been incoprated in to their contract through a course
of dealings.

Lord Pearce held that the course of dealings was not consistent
because previously risk notes were signed.A course of dealing must
be regular and consistent.

10. CONSTRUCTION/INTERPRETATION OF EXCLUSION

CLUASES BY COURTS

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Where it is held that an exclusion/exemption clause is
incorporated in to a contract, important and difficult questions of
construction may arise. Courts have tended to use strained
methods of construction to avoid giving effect to what they regarded
unreasonably wide exception.

In Photo Production Ltd v Securicor Transport Ltd 1980 AC 827 the

House of Lords made it clear that they deprecated the use of
artificial methods of construction now that legislative methods were
available for striking down unreasonable exemption clauses.

STRICT LITERAL INTERPRETATION

For an exclusion clause to operate, it must cover the breach. if

there is then the type of liability arising is also important.

There are 2 types of liabilities. Strict liability- arising due to a

state of affairs without the partyat breach necasirly at fault.and
libilty for negilegence(liability arising due to fault).

11. CONTRA PROFERENTEM RULE

This Rule means that the clause will be construed against the
person who imposed its inclusion .ie contra the proferenes.Under
this rule , ambiguity or uncertainty will be construed narrowly
against the party purporting to rely on the clause.

If, after attempting to construe an exclusion clause (or indeed any

other contractual term) in accord with its ordinary and natural
meaning of the words, there is still ambiguity then (if the clause
was imposed by one party upon the other without negotiation)
contra proferentem rule applies.

In terms of negilegence, the courts have the approach that it is

unlikely that someone would enter into a contract allows the other
party evade fault based liability. As a result, if a party wishes
exempt his liability for negligence ,he must make sure other parties
understand that. The decision in Canada ss lines ltd v the king
1979 held that;

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 1. if the exclusion clause mention negligence explicitly ,then the
liability for negligence is excluded.

2. If the negligence is not mentioned, then liability for negligence is

excluded only if the words used in the exclusion clause are wide en
sough to exclude liability for negligence. If there is any ambiguity
,then the contra proferntum rule applies.

3.If a claim on another basis can be made then that negligence,

then it covers it.

Defense against Exclusion Clauses.

Although ignorance is no defense against the effect of exclusion

clauses, the following might offer grounds for believing that the
exclusion clause was not properly incorporated.

1. Misreperesentatoion-it’s a defense when there was

misrepresentation.

Case law;Curtis v Chemicla Cleaning and Dyeing co.1951

Facts-claimant took wedding dress to cleaners. was told to sign

exclusion clause against damage to beads yet it was excluding
against all liability. held-there was misrepresentation.

2. Non est factum-defense if the person in breach can prove that

he was incapacitated to understand then clause. Case Saunders v
Anglia building society 1971

Facts-78 yr old woman signed document thinking was giving

interest in house after her death to nephew. Nephew made her sign
unconditional transfer. held document was not too different to
what she believed to sign.

12. "NEMO DAT QUOD NON HABET"

Another common law maxim that applies to sale of goods is "nemodat quod
non habet": a person cannot give that which he does not have. This
maxim has been incorporated into every contract of sale of goods by section
23, which provides that "where goods are sold by a person who is not the

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owner thereof and who does not sell them with the consent or
authority of the owner, the buyer acquires no better title to the goods
than the seller had".

This principle was developed by the common law courts to protect the
interest of the true
owner of the goods.

Consequently, if the goods had been obtained by fraud and the seller had a
voidable title thereto, the buyer would acquire a voidable title even if he
were not aware of the fraud. If the seller had a valid title, the buyer would
get a valid title.

Exceptions

The "nemodat" rule is subject to the following exceptions which are

provided by the Act:

(a) Estoppel
The "nemodat" rule will not apply if "the owner of the goods is by his
conduct precluded from denying the seller's authority to sell".
An estoppel will be raised against the owner of the goods only if his conduct
misled a third party into believing that the person who was selling the
disputed goods was either their owner, or had the owner's authority to sell
them.

(b) Sale by a Factor

Sale by a factor gives a good title to the buyer in good faith. The factor is a
mercantile agent whose business is to sell or otherwise deal in goods.
He can sell goods entrusted to him and give a good title provided the
conditions of the Act are complied with. These conditions are that the goods
shall have been entrusted to him in the ordinary course of his business and
that they shall be in his possession with consent of the owner.

(c) Sale under a Voidable Title

Where the seller of goods has a voidable title thereto but his title has not
been avoided at the time of the sale, a buyer in good faith without notice of
the defect in the seller's title acquires a good title.

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 (d) Resale by Unpaid Seller in Possession
If a person who has sold goods, but has remained in possession of them or
of the documents of title to them, transfers the goods or documents of title
to a third person, that person acquires a good title if he receives the goods
in good faith and without notice of the previous sale.

(e) Sale by a buyer in Possession

Where a person having bought or agreed to buy goods obtains with the
seller's consent possession of the goods or the documents of title to them,
a transfer by that person of the goods or documents of title to a third person
receiving them in good faith and without notice of lien or other right of the
original seller in regard to the goods, has the same effect as if the person
making the transfer were a mercantile agent in possession of the goods or
documents of title with the consent of the owner. The seller has rights
against the original purchaser but cannot claim the goods from the second
purchaser

(f) Sale Under Statutory powers of sale, such as a sale under the
Uncollected Goods Act.

(g) Sale under a common law power of sale, such as a sale by an

agent of necessity.

a. Sale under a order of Court of competent jurisdiction. This is

under a writ of execution. A writ is an order issued by a court
performance of a specified act or giving authority for something to
be done e.g. where the court issues an order for certain goods to
be seized, a court broker can exercise the order and when he sells
the goods, he passes a good title.

a. Sale in market. A market overt is an open public legally constituted

market, usually held in periodic intervals in some particular place
and often for the sale of particular goods. In the city of London,
every shop is by custom a market overt for the sale of goods as the
shopkeeper normally sells.

Stolen Goods
Where goods have been stolen and the thief has been prosecuted and
convicted, the property in the goods revests in the original owner. This is so
even if the goods had been resold or otherwise dealt with in the meantime.

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This provision may be viewed as supplementing the provisions of the Penal
Code pertaining to theft by making it impossible for a client of a thief to
plead his innocence as a ground for retaining stolen goods. This rule should
make people extremely careful when buying goods so that they do not buy
them from a thief. If that really happened thieves would have no buyers and
would be forced to abandon stealing. Unfortunately this is not so and some
people knowingly buy stolen goods because they are generally cheaper to
buy.

13. DOCTRINE OF CAVEAT EMPTOR

The term caveat emptor literally means “let the buyer be ware”. It is the
duty of the buyer to be careful while purchasing goods of his requirements.
The seller is not bound to disclose every defect in goods of which he may be
aware.
The buyer must examine the goods in order to satisfy himself that the goods
he bysare suitable for the purpose for which he wants them. If the goods
turn to be defective, or do not suit purpose, then the seller cannot be held
liable.

If the buyer depends upon his own skill and knowledge and makes a bad
choice, he must blame himself for his own mistake.

Exceptions
The doctrine of caveat emptor is subject to the following exceptions:

• Misrepresentation
When the seller misrepresents the facts and the buyer relies on it, the
doctrine does not apply and such a contract is avoidable at the option of
the buyer.

• Fraud
The doctrine does not apply in cases of fraud. Therefore where the buyer
relies on fraud committed by the seller, the doctrine does not apply. E.g.
Where the seller conceals a defect in the goods so that it could not be
discovered by reasonable examination, the doctrine does not apply.

• Goods Sold by Description

Where goods are sold by description and they do not correspond to the
description, the doctrine does not apply.

• Sale by Sample

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Where goods are sold by sample and the bulk does not correspond with the
sample, the doctrine does not apply.

• Relying on the Seller’s Skill

Where the buyer relies on the buyer’s skills and knowledge but the goods
turn out to be unfit for the specified purpose, the principle of caveat emptor
does not apply.

• Condition or Warranty or Trade or Usage

Where the trade and usage attaches an implied condition or warranty, the
doctrine does not apply and the seller is liable in damages. For example, in
Hire-Purchase, sale with regard to any of the following;
• Condition as to quality and fitness,
• Condition as to merchantability,
• Condition as to right to sell,

• Sale under a Patent or Trade Name

Any item sold under patent or trade mark must conform to the
specifications of the patent or the trade mark.

14. TRANSFER OF PROPERTY

Assuming that the seller has a right to sell the goods, it becomes
necessary to determine the precise moment when the transfer of the
property in goods, envisaged by the contract of sale, takes place.
Such determination is important because:

i)To determine who bears the risk of loss in case of

damage of loss of goods

ii) In case of bankruptcy/insolvency of the buyer or

seller. we need to know whether the goods belong to the
trustee of the bankruptcy or not.

The following should be noted

a) Risk passes with the property-the one who owns the

goods bears the risk.

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 b) Instituting against third parties- in case of damage by
3rd party, the owner of the goods takes action against the
wrong doer.

c) Sue for price-the seller can only sue for the price if the
property in goods has passed to the buyer.

D) Insolvency of the seller or buyer-the one who owns the

goods is affected incase of insolvency.

15. RULES REGULATING TRANSFER OF PROPERTY

Transfer of Property depends on the nature of the goods, that is,

these can be analyzed/studied under 2 categories.

1. Transfer of property in specific or ascertained goods

2.Transfer of property in unassertained of future goods

WHEN GOODS HAVE TO BE PUT IN DELIVERABLE STATE SEC

.26(b)

It provides that where there is a sale of specific goods and the seller
is bound to do something to the goods, for the purpose of putting
them into a deliverable state, the property shall not pass until that
thing is done, and the buyer has notice of it.

Case Law;Underwood ltd v Burgh castle& cement syndicate

1922-plantiff sold engine which as fixed on the floor.he had to
remove it –it was damaged during loading and buyer rejected
it.Held-engiene was not in deliverable state.

WHEN SOMETHING HAS TO BE DONE TO THE GOODS TO

ASCERTAIN THE PRICE SEC 26(c)

It provides that where there is a contract for sale of specifc good in

deliverable state, but the seller is bound to weigh, measure, test or
do some other act or thing with reference to the goods for the

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purpose of ascertain the price, property does not pass until that act
or thing is done, and the buyer has notice of it.

Case Law;Zagury v Furnell 1809-a seller of goat skins had to

count thenumber of skins in the bales to determine the price of
each bale.fire destroyed them before counting.Held;loss was to the
buyer because property had not passed.

UNDER SEC 26(d) WHEN GOODS ARE DELIVERED TO THE

BUYER ON APPROVAL OR ”ON SALE OR RETURN” OR OTHER
SIMILAR TERMS,THE PROPERTY IN THE GOODS PASSES TO
THE BUYER

TRANSFER OF PROPERTY IN SPECIFIC OR ASCERTAINED

GOODS

Section 1defines Specific Goods to mean; goods and percentages of

goods identified and agreed upon by the parties at the time a
contract of sale is made and includes undivided shares in specific
goods held in common.

SEC .25 provides that where there is a contract for sale of specific
or ascertained goods, the property in the goods passes to the buyer
at such time as the parties to the contract intend it to pass.

SEC 26(a) provides that where there is an unconditional contract

for he sale of specific goods in a deliverable state, the property in
the goods passes to the buyer when the contract is made, and it is
immaterial whether the time of payment or the time of delivery or
both are postponed. Case Law,Kursell v Timber Oerations 1972-
plantiff sold trees in a forest that had to mature at a particular
date.buyer had 10 years to remove the trees. Parliament shortly
passed a law confiscating the forest.Held, loss was at the seller
because property had not passed.

Case Law;Elphick v Barnes 1880.seller of horse ,delivered it to

buyer on terms of” sale or return in 8 days”horse died on 3 rd day

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not at fault of buyer.Held;loss was with seller because property had
not passed.

TRANSFER OF PROPERTY IN UNASCERTAINED GOODS

Unascertained goods are goods which are not separately

indentified at the time of making the contract. They are only
understood by parties by description. These include goods to be
manufactured or grown by seller and any unidentified portion of
the whole.

NB.there can only be an agreement to sell where the subject matter

of the contract is furture goods.

SEC 22 provides that where there is a contract for the sale of

unascertained goods, property in goods shall no pass to the buyer
until the goods are ascertained.

16. RISK AND FRUSTRATION

Like all other contracts, also Sale of Goods may be frustrated. The
Sale of goods and supply of services Act, 2018 does not define Risk
but judges have defined risk in 3 ways

a)Risk that the goods will wholly or partly damaged by

fire,accidents or theft etc.

b)Risk that is attributed to acts of default by either parties.it does

not cover risk or damage dealt with in the terms of a contract.

c) SEC 27 of the SOG Act provides that risk Prima facie passes
with property.

1) Unless otherwise agreed, the goods remain at the seller’s risk

until the property inn the goods is transferred to the buyer.

2) Where the property in the goods is transferred to the buyer

under subsection (1), the goods are at the buyer’s risk whether
delivery has been made or not.

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 3) Notwothstanding subsection (1), the risk of loss shall not pass
from the seller to the buyer unless the actions of the seller conform
with the condition imposed upon the seller under the contract.

4) Where a delivery has been delayed through the fault of the buyer
or the seller, the goods are at risk of the party at fault as regards
any loss, which might not have occuired, but for the fault.

5) This section shall not affect the duties or liabilities of the seller
or the buyer as a bailee of the goods of the other party.

6) Where an aggrieved party in case of breach of contract, is in

control of goods are not covered by his o her insuarance,the party
in breach is liable for any loss or damage as a result of the breach
caused to the aggrieved party.

17. PERFORMANCE OF CONTRACT

Obligations of the parties

DUTIES OF PER SONS TO A CONTRACT

SEC 34 SOG-its duty of seller to deliver goods, and to the buyer

and the buyer to pay for them.

18. DUTIES OF A SELLER

1.Duty to deliver Goods-SEC 34(1) enacts the duty of seller to

deliver the goods and of the buyer to accept and pay for the goods,
in accordance with the terms of the contract of sale.

MEANING OF DELIVERY-SEC 1 SOG defines delivery to mean a

voluntary transfer of possession from one person to another and
includes an appropriation of goods being trandfered to the buyer.

METHODS OF DELIVERY

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a)Physical transfer of goods

b)Transfer of the means of control.eg keys to the store where goods

are kept.

c)Delivery of documents of Title

d)Constructive delivery/where the buyer had the goods but was not
the owner.

SEC 36 is to the effect that whether it is for the buyer to take

possession of the goods or for the seller to send them to the buyer
is a question depending in each case on the contract, express or
implied, between the parties.

Where there is no contract, express or implied, as to place of

delivery, the place of delivery is the seller’s place of business, if the
seller has one , and if not, the seller’s residence. SEC36(2).

The exception is where contract is for specific goods which are

known at particular place at the time of contract then the place of
delivery’s the place where the goods are.

DELIVERY TO AGENTS

Case law has provided that if it’s the seller”s duty to deviver the
goods to the buyer.and he delivers the person found at the buyers
premises is presumed to have authourity to receive the goods.
BLOCK CASE 1922 2 KB 155

TIME OF delivery

The contract should stipulate the time of contract but if not

provided then it should be delivered in reasonable time.s29

Delivery of wrong Quantity

SEC 37 SOG provides that where the seller delivers to the buyer a
quantity of goods less than the seller contracted to sell, the buyer
may reject them, but where the buyer shall pay for the goods at the
contract rate.

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 SEC 37 (2) provides that where the seller delivers to the buyer a
quantity of goods larger than the seller contracted to sell, the buyer
may accepy the gooodes included in the contract and reject the
rest, or the buyer may reject the whole and where the buyer
accepts the whole of the goods deliverd the buyer must pay for
them at the contract rate.

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

DELIVERY BY INSTALMENT

SEC 39 provides for delivery by instalment,the general rule is that unless

otherwise agreed,.the buyer is not bound to accept delivery by
installments see Davshi shah v Mohamial 18 EACA 79

Where the contract provided for delivery in instalment,there are two

scenarios

1.where each instalment is separately accounted for and incase of

defact,each instalment is handled individually.

2.Where delivery is in instalment but under one contract of delivery.its a

question of terms of contract

DELIVERY TO CARRIERs

This is provided for under SEC 40 of the Sale of goods and supply of
services Act, 2018 and supply of services Act

IF it was agreed that delivery is by carrier, so when the seller delivers to

the carrier, he is taken to have delivered even if carrier was appointed by
either buyer or seller.

IF the seller has duty to make special agreement with carrier, in case of
non delivery, then the buyer can sue seller for damages.

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RULES OF DELIVERY

a. The goods must be in a deliverable state

b) Unless otherwise agreed, the cost of putting the goods into a deliverable
state is borne by the seller

c) Whether it is for the seller to transmit the goods to the buyer or for the
buyer to take delivery thereof depends on the terms of the contract

d) Unless otherwise agreed the place of delivery is the sellers place of

business, if any if not, his residence.

e) In a sale f specific goods which the parties know are in some other place,
that other place is the place of delivery.

f) If the goods are in the hands of a third party, delivery takes place when
such party notifies the buyer that he holds goods on his behalf.

g) If the seller is bound to transmit the goods

h) Delivery by common carrier is prima facie complete when the goods are
handed on to the carrier.

i) If the seller delivers more goods than contracted the buyer is entitled to

(i) Reject all the goods

i. Accept those included in the contract and reject the balance or

ii. Accept all the goods and pay at the contract rate.

j) If the seller delivers less goods than contracted, the seller is entitled to:
i. reject all the goods or
ii. accept and pay at the contract rate.

k) If the goods delivered are mixed with goods of a different description, the
buyer is entitled to
(i) reject the goods or
i. accept those included in the contract and reject the balance.

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l) Unless otherwise agreed the buyer is not bond to accept delivery by
instalments

m) Where delivery is by instalments to be paid for separately and the seller

makes one or more defective deliveries or the buyer neglects or refuses to
accept and pay one or more deliveries, whether this is treated as a severable
breach or a total repudiation of the contract depends on
i. the terms of contract
ii. the circumstances of the case.

n) if the buyer refuses to take delivery as of right he would not be bound to

return the goods but must notify the seller his refusal.

19. DUTIES OF A BUYER

Payment of the Price-The buyer has a duty to pay the agreed price.
in absence of another agreement ,he is entitled to claim procession
of the goods after payment of the price. Determination of the
Price

The price of goods may be determined as below.

i)Section 9 provides that price may be fixed by contract.

ii)Price may be determined in a manner parties have agreed,

iii) may be determined in course of dealings of the parties,.

If the above circumstances can’t determine the price, then the

buyer pays a reasonable price. Reasonable price depends on the
circumstances section 9(2) SOG

20. REMEDIES OF UNPAID SELLER

Section 50 SOG defines him as one who has not received his full
price or who has receieved a bill of exchange or other conditional
instrument and has been dishonored.

The Remedies are divided in 2 types

i)Real remedies which are rights against the goods

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ii) Personal remedies which are rights against the buyer.

A)Unpaid seller”s lien is a right to retain goods and be exercised

under circumstances specified in section 52 of the sale of goods
and supply of services Act.

Section 53 provides that the seller may exercise his right of lien on
the remainder of goods where he was made part delivery of the
goods unless there are circumstances which show an agreement to
waive the lien under circumstances as provided in Section 54 of
the sale of goods and supply of services Act.

B) The right of stoppage in transit, duration of transit and mode of

stoppage are provided for in section 55, 56 and 57

C) Un paid seller’s right of re-sale-a unpaid seller who is in

possession of the goods may re-sale them to a 3rd party who
acquires good title of the goods. This strengthens the right of lien,
and stoppage of transit.

The right of resale is available where’

i)the goods are perishable

ii)a notice of intention to sale has been given to the buyer and no
payment or tender of the price has been made within a reasonable
time

c)the right of resale has been reserved as per the contract of resale.

21. Rights of the Buyer

i)Action for price under Section 60 of SOG

Where, under a contract of sale, the property in the goods has

passed to the buyer, and the buyer wrongfully neglects or refuses
to pay the goods according to the terms of the contract, the seller
may bring an action against the buyer for the price of the goods,
together with any incidental damages.

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2) Where under a contract of sale, the price is payable on an agreed
date irrespective of delivery, and the buyer wrongfully neglects or
refuses to pay that price, the seller may bring an action against the
buyer for the price, together with any incidental damages, although
the property in the goods has not passed, and the goods have not
been appropriated to the contract.

3) Where, under a contract for supply of services, the services has

been supplied, and the buyer wrongfully neglects or refuses to pay
for the service according to the terms of the contract, the supplier
may bring an action against the buyer for the price of the service,
together with any incidental damages.

Case law;Omer Saleh v Besse 1960 EA 907

II) Action for non-acceptance Section 61 SOG. Where the buyer

wrongfully neglects or refuses to accept to pay for the goods, the
seller may bring an action against the buyer for damages for non
acceptance.

The measure of damages is the difference between the contract

price and the market or current price at the time when the goods
ought to have been accepted, or if no time was fixed for acceptance,
then at the time of the refusal to accept.

22. REMEDIES FOR THE BUYER.

I)Where there is breach on the conditions on part of the seller, the

buyer may repudiate the contract by rejection of the goods.

2.Action for non delivery,

Section 62 of the SOG provides that ;

• Where the seller or supplier wrongfully neglects or refuses to

deliver the goods or supply services to the buyer, the buyer may
maintain an action against the seller or supplier for damages for
non-delivery of the goods or failure to supply services.

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• The measure of damages is the difference between the contract
price and the market or current price at the time or times when
the goods ought to have been delivered or supplied the services,
or, if no time was fixed, then at the time of the refusal to deliver
or supply.

Case Law,Wamala Growers Coperative union v Attorney General

1997 111 KALR 73

3. Damages for Breach of Warranty- This is provided for under

Section 64 of SOG

4.Action for Specific Performance -Sec 63 SOG also provides for

the remedy. Its granted at the discretion of Court when it thinks fit.

NOTE: I do not own the copyright in this work. Substantial

parts of texts, papers and site information was used in the
compilation of this work. All rights belong to the original
authors except parts originally written by me.

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Notes by; MUSIIMENTA ALEX
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