COMMERCIAL

LAW
(SALE OF
GOODS)
BY SAMUEL MANTEAW

LAW FACULTY, UG.

 SALE OF GOODS
 Sale of Goods is an aspect of
commercial law.
 Commercial law is broad-scoped and
covers a lot of areas:
 Agency
 Sale of goods,
 Secured financing such as
 hire purchase,
 conditional sale agreements and
 finance leasing,
 Insurance
 Banking
 Non-banking financial transactions
 SALE OF GOODS
 Commercial law covers many
other areas:
 Negotiable instruments,
 Trade, investment, contracts,
 Electronic commerce,
 Companies,
 Taxation,
 Securities,
 Project finance and joint
ventures,
 Intellectual property,
 Unfair competition,
 Alternative dispute resolution.
 SALE OF GOODS
 SALE OF GOODS ACT, 1962 (ACT 137)
 P.S.ATIYAH, SALE OF GOODS(8TH
EDITION)

R. M. GOODE, COMMERCIAL LAW

 1. Nature and Formation of the

Contract of Sale of Goods

 A contract of sale of goods is defined as a

contract whereby the seller agrees to
transfer the property in goods to the buyer
for a consideration called the price,
consisting wholly or partly of money.

 section 1(1).
 SALE OF GOODS
 The price in a contract of sale may be
fixed by the contract or may be left to
be fixed in an agreed manner.

 It may also be determined by the course

of dealing between the parties.

 If the price is not so fixed or

determinable, then the buyer must pay
a reasonable price –

 a question of fact dependent on the

circumstances of each particular case.

 Contracts of part-exchange are

admitted within this definition of
sale.
 SALE OF GOODS
 Capacity to buy and sell is regulated by the general
law on capacity to contract and to transfer and acquire
property.
 section 2(1).

 A contract for the sale of goods may be made in

writing or by word of mouth (orally), or partly written
and partly oral, or may be implied from the conduct of
the parties.
 section 3

 The goods forming the subject of the contract of sale

may be either

 specific goods, identified and agreed upon before or at

the time when the contract is made, or

 unascertained goods not being so identified and agreed

upon.
 section 5(1).

 It may even be crops on the field, or to be planted.

 SALE OF GOODS
 Duties of the Seller

 Act 137’s fundamental obligations,

conditions and warranties impose
various duties on the seller

and

 a breach of any such duty or

obligation

 entitles the buyer to remedies.

 sections 55, 49, 57, and 58

 SALE OF GOODS
 Delivery of Goods is a
Seller’s Fundamental
Obligation

 Section 81 of Act 137 defines ‘delivery’ as

the voluntary transfer of possession from
one person to another.

 Delivery of goods sold is seller’s

fundamental obligation under the Act; and

 by its sections 8, 11 and 12 relating to the

fundamental obligation of the seller to
deliver goods sold, the Act introduces a
complete innovation particularly regarding
the sale of unascertained goods.
 SALE OF GOODS
 Of course, in a sale of specific goods
the seller is to deliver those goods
to the buyer.
 section 8(1).

 But, in a sale of unascertained

goods, the seller is to deliver goods
substantially corresponding to the
description or sample by which they
were sold.

 section 8(2);
 Birch v. Asempa [1992] 2 GLR 416
 Birch v. Asempa
 The plaintiff, B, on her own behalf and on
behalf of her brother, K, sued the
defendants jointly and severally as
administrators of the estate of S
(deceased) for the return to her of 4,360
cement blocks or their current value,
together with damages.

 In support of her case, B deposed that in

December 1981 she and K purchased a
total of 7,000 cement blocks from S and
that a receipt, exhibit A, was issued to
evidence the sale.

 After the sale they collected 2,640 out of

the blocks purchased, leaving 4,360 blocks
at the residence of S.
 Birch v. Asempa
 But that when she went to collect
the remaining 4,360 blocks after the
death of S in 1984, she found them
missing;

 whereupon she and her mother

called on S's family to demand the
return of the blocks, but the family
refused.

 B tendered in evidence exhibit A,

which unambiguously stated that S
had sold 7,000 cement blocks
belonging to him to K; as well as
exhibit B, a power of attorney from
K to B, authorising her to institute
the action.
 Birch v. Asempa
 Although exhibit A unambiguously
stated that S had sold the blocks to
only K

 and exhibit B not only clearly

indicated that the 7,000 blocks
belonged to K alone, but further
clearly directed B, inter alia, to
institute action against those who
had stolen the blocks,

 B explained in respect of exhibit A

that although she had jointly
purchased the 7,000 blocks with K,
S decided to issue the receipt in the
name of K only.
 Birch v. Asempa
 B's claim that she owned the subject blocks
jointly with K was supported by her mother
 who was not present at the purchase of the
cement blocks
 but testified that her two children had later
informed her that they had bought the
blocks.

 In their defence, the defendants testified

that when B and her mother called on their
family for the return of the blocks,
 the family had doubts regarding the veracity
of their claim
 and on examining exhibit A they found
nothing on the receipt to substantiate B's
claim,
 but nevertheless offered her an ex gratia
payment of ¢26,000 on account of the
cordial relationship that had existed between
B and S in his lifetime.
 B however refused the offer.
 Birch v. Asempa
 At the conclusion of the evidence on both
sides, counsel for the defendants raised
two fundamental objections to B's action:

 (a) that the 7,000 blocks were purchased

by K alone and not by K and B so that B
had no capacity to maintain the action on
her own behalf and on behalf of K; and

 (b) since B's claim was founded in detinue,

she could only succeed if she could
establish that she had made a demand
from the defendants as personal
representatives of S and yet they had
refused to give up possession of the
remaining blocks.
 Birch v. Asempa

 Counsel for B however

maintained in reply that B's
action was founded on breach
of contract in the sense that
the defendants as personal
representatives of S had by
their conduct breached the
contract for the sale of the
7,000 blocks.
 Birch v. Asempa
 The trial court, inter alia, found
that:

 (i) although B had made a demand

on S's family for the return of the
remaining blocks, at no time had B
made such a demand on the
defendants qua personal
representatives of S;

 (ii) although B had averred in

paragraph (5) of her statement of
claim that the blocks in dispute
were collected by one N who
claimed that he had purchased
them, there was no evidence in
respect of the person who had sold
the blocks to N; and
 Birch v. Asempa
 (iii) the 7,000 cement blocks were
bought by K and that he owned the
blocks alone, and not jointly with B.

 After raising, on its own motion, the

issues of:

 (i) whether K by leaving the cement

blocks at the premises of S after the
purchase thereby imposed on him
the duties of a bailee; and

 (ii) the propriety of amending the

title of B's case to read that B had
sued as the representative of K.
 Birch v. Asempa
 The court held:

 (1) under section 8(2) of the Sale of Goods

Act, 1962 (Act 137) the fundamental
obligation of the vendor under a contract
for the sale of goods was to

 deliver them to the purchaser when they

were paid for, and

 the purchaser was also obliged under

section 21 of Act 137 to accept delivery of
the goods.

 Unless a contrary intention appeared in the

contract, the place of delivery was the
vendor's place of business or his residence
as provided under section 19 of Act 137.
 Birch v. Asempa
 In the instant case, the contract of sale of
the 7,000 blocks was negotiated and
concluded when

 the purchaser tendered the full purchase

price to S who received same, gave a receipt
to the purchasers and

 delivered the 7,000 blocks which were at his

premises to the purchasers.

 The property in the goods together with the

risks in them then passed onto the
purchasers with the consequence that the
entire or part of the blocks which were left
at the premises of S were on account of
sections 26(2) and 27(1) of Act 137 left
there at the purchaser's own risk.
 Birch v. Asempa
 Hence, it was clearly untenable to talk of
breach of contract by S or his personal
representatives in the circumstances.

 Furthermore, even if it was assumed that

the defendants were in breach of a contract
for the sale of the 7,000 blocks,

 the legal remedies of the purchaser lay not in

an action for the return of the blocks or their
value

 but for any of the remedies set out in

sections 48-58 of Part VI of Act 137, which
included
 damages for non-delivery and a recovery of
the purchase price.

 Thus, in so far as the plaintiff claimed for a

return of the cement blocks or their current
value, her action could not be said to lie in a
breach of the contract of the sale.
 Birch v. Asempa
 (2) The law distinguished three categories
of bailees, namely
 a bailee for reward,

 a gratuitous bailee and

 an involuntary bailee.

 In the cases of bailment for reward and

gratuitous bailment it was the duty of the
bailee to take all reasonable precautions for
the safety of the goods bailed to him.

 There must however be positive evidence

that the one concerned was a gratuitous
bailee or a bailee for reward.
 Birch v. Asempa
 On the other hand, an involuntary
bailee,
 that is a person who through no act of
his own and who without asking for
them came into the possession of the
property of another,

 had no duty of care as imposed on the

gratuitous bailee or bailee for reward.

 The involuntary bailee was impliedly

authorised to take reasonable steps
to return the property
 but he could not be held tortiously liable
where he merely kept and lost a chattel
even though the loss occurred through
his negligence.
 Birch v. Asempa
 In the instant case, there was no
evidence that after the purchase
transaction S accepted to hold onto
the blocks gratuitously or for
reward.

 If anything at all, S stood in the

position of an involuntary bailee and
as such he could not be sued in
detinue;

 therefore his personal

representatives could likewise not
be sued.
 Birch v. Asempa
 (3) To succeed on a claim in detinue the plaintiff
must prove that he made a demand for the
possession of the goods and the defendant
wrongfully refused to deliver up possession.

 Thus, where there was neither a demand nor a

refusal, no action in detinue could lie.

 On the evidence, the plaintiff made a demand for

the possession of the 4,360 cement blocks on the
family of S and

 not on the defendants who were the personal

representatives and who at the time did not even
have letters of administration in respect of the
estate.

 The liability of the family was however not

coterminous with that of the personal
representatives.

 Consequently, the plaintiff having failed to make

any demand on the defendants as personal
representatives, detinue could not lie.
 SALE OF GOODS
 Thus, under Act 137, the seller’s fundamental
duty (which cannot be evaded by exemption
clauses)
 section 8(3)

 is to deliver goods substantially in accordance with

the description or sample.

 Sections 11 and 12 take this duty further by

imposing a condition on the seller that the goods
will correspond exactly with the description or
sample.

 Unlike the fundamental obligation, this condition

may be excluded by express agreement, and
 moreover, it does not give the buyer a right of
rejection where the breach is trivial only.
 section 49(1)(b)

 (Breach of sections 11 and 12 only entitles buyer

to damages.)
 SALE OF GOODS
 Under the Act, delivery is
concurrent with payment
subject to agreement by the
parties.
 sections 15(1) and 22

 Seller bears the cost of and

incidental to putting the goods
in a deliverable state, unless
otherwise agreed.
 s.17. Place of delivery is usually
seller’s place of business, if he
has none, his residence.
 s.19. Birch supra
 SALE OF GOODS
 Section 18 of Act 137 provides
guidance on the legal methods of
delivery that a seller may adopt.
 It includes transferring to the buyer
actual physical control over the goods,
 transferring to the buyer the means of
obtaining actual physical control over
the goods, or
 transferring documents of title to the
goods to the buyer.
 In certain instances, delivery of goods to
buyer’s agent or to his order, or to a
carrier for transmission to buyer is a
delivery to buyer; and where goods are
in the possession of a third party, they
are delivered to buyer when the third
party acknowledges to him that he holds
the goods on his behalf.
 See Sales of Goods Act, 1962 (Act 137),
sections 18(2)-(4).
 SALE OF GOODS
 Existence of Goods is an Implied
Condition Imposed on Seller
 Section 9 of Act 137 imposes an
implied condition on the seller in
sale of specific goods that the goods
are in existence at the time when
the contract is made.

 Section 9 focuses on specific goods

 This is because sec. 5(2) permits sale of

unascertained goods including “goods to
be manufactured or grown or acquired
by the seller after the making of the
contract.”
 Section 5(2)
 SALE OF GOODS
 Right to Sell is an Implied
Warranty
 The right to sell the goods at the
time when the property in the goods
is to pass is an implied warranty
under Ghana law, not an implied
condition.
 Section 10.
 Section 28(1) of Act 137 further applies
the nemo dat quod non habet rule to the
sale of goods and as such, subject to
statute,
 a buyer acquires no better title than the
seller had where the goods are sold by a
person who is not the owner thereof and
who does not sell them under the
authority or with the consent of the
owner.
 SALE OF GOODS
 Seller’s Duty to Supply Goods of Right
Quality and Fitness

 Supplying Goods Corresponding to

Description or Sample

 Sections 11 and 12 of Act 137 impose a

condition on the seller that the goods will
correspond exactly with the description or
sample.

 section 11 (on contracts for the sale of goods

by description) and section 12 (on contracts
for the sale of goods by sample.).

 This condition may be excluded by express

agreement.
 SALE OF GOODS
 Breach of sections 11 and 12 entitles buyer to
damages, if any.
 section 55

 In the old Ghanaian case of Sackey v. Fattal,

Ollennu J (as he then was) held that
 “where a contract is breached by the delivery of
goods below sample-quality, the quantum of
damages is the difference in market price fetched
by the goods delivered and the prevailing market
price for goods of the sample quality”.

 Breach of sections 11 and 12 does not give

buyer a right of rejection where the breach is
trivial only.
 49(1)(b)

 Rejection rights may be triggered under

Sections 11 and 12 only where the seller also
breaches section 13’s requirements on quality
and fitness of goods sold for any particular
purpose
 SALE OF GOODS
 Supplying Goods Free from Defects
 Section 13(1)(a) implies a condition that the
goods are free from defects which are not
declared or known to the buyer before or at the
time the contract is made.

 The seller cannot exclude this obligation where

he deals in those particular goods in the
ordinary course of his business.
 section 13(2)

 And a breach of this condition entitles buyer to

reject the goods.

 This condition is subject to some exceptions

including where buyer has examined the goods
or sample (in respect of defects which should
have been revealed by the examination) and in
cases where the seller was not and could not
have been aware of the defects (in respect of
goods not sold by the seller in the ordinary
course of his business.)
 13(1)(a)(i)-(iii).
 SALE OF GOODS
 Supplying Goods of Reasonable Fitness for
Required Purpose
 There is an implied condition that the goods are
reasonably fit for the purpose for which they are
required.
 13(1)(b)

 This condition is predicated on two contingencies:

 (1) the goods must be those which are supplied by the
seller in the course of his business, and
 (2) the buyer must have expressly or by necessary
implication made the purpose for which the goods are
required known to the seller.

 Buyer can reject the goods if this condition is

breached.

 Excluding this condition has been strictly limited,

though not prohibited:
 seller must bring the provisions of any such exclusion
clause to the notice of buyer and
 make its effect clear to him before any contract is made.
 section 13(2)
 SALE OF GOODS
 In one case, the Amporisco Case, the court stated as
follows:

 “Section 13(1)(b) does clearly talk of an implied condition that

the goods are reasonably fit for the purpose for which they
are supplied. The section did not explain what amounts to
goods being reasonably fit for a purpose but I am of the
opinion that it means the machines may not be completely or
exactly fit for the purpose. Where a few fittings could be made
to it in order to make them work, the condition is satisfied for
they are reasonably fit for the intended purpose.”

 In the case of Yirenkyi v. Tormekpe, involving the sale of a

second-hand vehicle, it was emphasized by the court that
even if a vehicle was bought from a dealer, the most that was
required of the seller was that the car sold should be
reasonably fit for the purpose of being driven along the road.

 As Rockson v. Armah noted, a second-hand car must be

taken as it is and not elevated into a new car with all
expectations of factory freshness.

 Generally, Section 13 applies to all goods delivered in

purported pursuance of the contract and extends to all boxes,
tins, bottles or other containers in which the goods are
contained.
 SALE OF GOODS
 Seller’s Duty to Supply
Goods of Right Quantity
 Where the seller delivers to
the buyer a quantity of goods
less than he contracted to
sell, the buyer may reject
them.

 But if he accepts the goods,

he must pay for them at the
contract rate.
 section 14(1)
 SALE OF GOODS
 In cases where the seller
delivers to the buyer a quantity
of goods larger than he
contracted to sell,
 the buyer may not reject all the
goods by reason only of the excess
in quantity.
 He may accept all the goods (paying
for the extra goods at the contract
rate) or
 he may accept the goods which should
have been delivered and reject the
remainder
 (in which case the buyer may recover
damages from the seller for the cost of
separating the goods which should have
been delivered from the remainder.)
 SALE OF GOODS
 Duties of the Buyer
 Paying Price & Accepting
Delivery are Buyer’s
Fundamental Obligations
 The buyer has two
fundamental obligations in a
contract of sale, namely;
 (1) to pay the price and
 (2) accept delivery of the goods.
 Payment is concurrent with delivery
unless the parties agree otherwise.
 section 22
 SALE OF GOODS
 Unless otherwise agreed, stipulations as to
the time of payment or for accepting
delivery are warranties and not conditions
of a contract of sale.
 section 23
 This may be contrasted with section 16(2)
which makes stipulations as to the time of
delivery conditions binding the seller.

 A buyer is not bound to accept delivery of

the goods by instalments, unless the
parties agree to do so.
 section 24

 “caveat venditor” rather than one of caveat

emptor.
 section 13
 SALE OF GOODS
 1.5.Transfer of Property and Risk

 Transfer of Property in Goods

 Generally, the property in goods under a

contract of sale passes when the parties
intend it to pass,

 But

 in the absence of a contrary intention,

property passes when the goods are
delivered to the buyer.
 section 26(1)&(2); see Birch v. Asempa

 However, unascertained goods must be

ascertained before the property in the
goods can be transferred to the buyer.
 section 25
 SALE OF GOODS
 Transfer of Risk in Goods

 The question of risk usually arises where the

goods which form the subject matter of the sale
are lost, damaged or destroyed and it is
necessary to decide which of the parties must
bear the loss.

 Risk in goods under a contract of sale is

transferred to the buyer when the parties intend
it to be transferred,

 But

 in the absence of any contrary intention, the

goods are at the seller’s risk till property in them
is transferred to the buyer, in which case risk
passes at the same time as property.
 Section 27(1)&(2);
 Birch v. Asempa
 SALE OF GOODS
 The rule on transfer of risk is subject to a
number of exceptions including:

 (1) Delays
 Where the party at fault must bear the risk of
any loss, damage or deterioration which might
not have occurred but for such delay.
 Section 27(3)

 (2) Bailment
 Where a party in possession of the goods – be
it seller still in possession after property has
passed or buyer in possession before property
passes – is deemed a bailee and expected to
exercise reasonable care over the goods,
failing which he will bear the risk of any loss,
damage or deterioration caused to the goods
by his fault.
 Section 27(4).
 Birch v Asempa
 SALE OF GOODS
 Transfer of Property by
Non-Owner
 Nemo dat quod non habet,
 Estoppel,

 Disposition under voidable title,

 Disposition by mercantile agent in
possession,
 Disposition by seller in possession,
and
 Disposition by buyer in possession.

 Sections 28-32
 SALE OF GOODS
 In all the transfer by non-owner
cases listed above, the disposition
will be valid if the transferee takes
in good faith and for value without
notice of the defect in title of the
transferor. [BPFVWN].

 However, with regards to the sale of

motor vehicles, the Act provides
that licensing constitutes notice of
ownership or interest of the person
in whose name it is so licensed;
 Section 33(1);
 Seidu v. Agricultural Development Bank
[1992] 1 GLR 536
 SALE OF GOODS
 Remedies

 Remedies Available to Seller

 A seller has two kinds of rights when a buyer

defaults in his obligation to accept and pay for
the goods:

 (1) Real rights

 (lien, stoppage in transit, resale, and recovery of
possession)

 And

 (2) Personal rights

 (action or suit for the price, and damages for non-
acceptance).

 sections 34-48
 SALE OF GOODS
 Remedies Available to Buyer
 Real rights
 Rejection of goods and refusal to pay the
price
 lien rights (where a buyer has paid the price
or any part thereof he may retain possession
(of the goods he has rejected) until the seller
repays or tenders the amount(s) he has
received from the buyer.)
 sections 49-52

 The rejection right is usually triggered in

cases where:

 (1) the seller is guilty of a breach of a

fundamental obligation,
 (2) the seller is guilty of a breach, not being
of a trivial nature, of a condition of
the contract and
 (3) the buyer entered into the contract as a
result of fraudulent or innocent
misrepresentation on the part of the
seller.
 SALE OF GOODS
 Personal rights:

 Damages for non-delivery (including

non-delivery resulting from rightful
rejection of delivered goods),

 Damages for breach of warranty or

condition,

 Recovery of amounts paid by buyer from

seller, and

 Specific performance to compel seller to

deliver goods.

 section 49 - 58
THANK YOU

 ANY QUESTIONS