Sale of Goods contract

A sale of goods is a "contract by which the seller transfers or agrees to transfer the property in goods to the buyer for money consideration called the price": s 2(1) Sale of Goods Act.

In order to constitute a sale of goods under the legislation, the consideration must be money, the price is fixed during the course of negotiations between the parties and the contract of sale must be in relation to goods (or chattels) rather than land or buildings. The agreement need not be in writing, but is sound practice to do so to avoid uncertainty and the terms of the sale contract, such as the time of delivery, the price, standard of goods, whether they have been sold subject to a description, whether they may be returned, and whether a retention of title is intended to apply to the goods sold under the contract.

The ownership of goods passes at different times, depending upon the type of goods sold in the sale of goods contract, and are different for specific and named goods, unascertained goods and future goods. The time the ownership (i.e. title) passes in sales of goods is important as the owner of the goods bears the risk in the event that the goods are destroyed or they perish. In some instances the contract may be able to be avoided in its entirety.

Terms implied into sales of goods contracts by the Sale of Goods Act include:

1. the seller has the right to sell the goods;
2. the goods are free from any security interest;
3. the buyer will have quiet enjoyment of the goods;
4. where the goods sold by description, the goods will conform with the description;
5. where the goods sold by sample, the goods will conform with the sample;
6. the goods are of satisfactory quality unless defects are brought to the notice of the buyer prior to the contract or a reasonable inspection would reveal the defect;
7. the goods are reasonably fit for the purpose stated by the intended buyer or implied by the buyer's statements and conduct;

Possible Exclusions

The parties may agree that the implied warranties relating to sale by description, satisfactory quality and sale by sample do not apply in commercial, rather than consumer sales. The warranty that the seller has the right to sell the goods may not be excluded by agreement.

Usage: The title passed under sale of goods upon delivery.

Related Words: personal property; retention of title; quiet possession; security; contract; mortgage; charge; lien.