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S. 3 (4) conclusion of Agreement to sale.

Formalities of the contract

S. 5 - How contract of sale is made

(i) In writing (either with or without seal)

(ii) Orally

(iii) Implied.

S. 6 (1) Contact of sale for two/more hundred shillings is required to be in

writing.

S. 6 (2) This apply to Executory contracts.

S. 6 (3) Acceptance.

NATURE OR PARTIES:

- Capacity of parties: Capacity to buy and sell is regulated by the general law

concerning capacity to contract, to transfer and to acquire property:

- Persons who are incompetent to contact can also enter into a

contract to sale. But these contracts must be for necessaries and

they will be liable to pay a reasonable price for them.

SUBJECT MATTER OF CONTRACT

The subject matter of sale of goods contract are goods. The definition of goods show
that it is only the movable property which qualifies as goods under these kind of

contracts. Therefore the subject matter of the contract of sale of goods does not include

the immovable property eg. Land and things which are permanently attached to land.

S.7 Existing or future goods

S. 8 Sale of perished goods = void

S. 9 Goods perished after agreement to sale = voidable.

VALUE OF GOODS

The Value of Goods is ascertained by Price.

How is price ascertained/determined?

- (i) It may be fixed by the contract

(ii) It may be left to be fixed in manner provided by the contract (e.g. by a

valuation/or an arbitration.

(iii) It may be determined by the course of dealing between the parties (e.g.

previous transactions between them or any relevant custom of the

trade/profession.

S. 10 (1)

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- It should be noted that where the price is not determined in

accordance with the above provisions, the buyer must pay a

on the circumstances of each particular case. S. 10 (2).

S. 11 - Also if the agreement to sell is dependent on the terms that the price

is to be fixed by the valuation of a third party, and such third party

cannot or does not make such valuation the agreement can be avoided

(is voidable).

- But (i) where the goods or part thereof have been delivered to the

buyer and he has appropriated them to his use, the buyer must pay a

reasonable price for them.

- Where such third party is prevented from making the valuation by

the fault of the seller/buyer, the party not in fault may sue for

damages against the party in default. S. 10 (3).

- It is difficult to see how the buyer would be able to prevent

valuation but presumably the Act is concerned to cover all

possibilities.

CONDITIONS & WARRANTIES

The distinctions between warranties and conditions are important because of the

difference in remedies that follow in case of breach.

Under the Law of contract, two types of statements are made in the course of

negotiating an agreement namely

(2) contractual – i.e. the terms of contract which are either conditions or warranties.

Here the second category of statements are concerned; and the consequences of the

breach of each are emphasised.

Under the law of contract the following are the remedies for the breach:-

(a) Breach of condition – here the aggrieved party may elect either

(i) To repudiate the contract by rejecting the goods

With no liability to pay price or, if the price has been paid, it ma be recovered.

(ii) To treat the contract as subsisting but to claim

for damages.

(b) Breach of Warranty: The aggrieved party has no right to repudiate the contract,

but may sue for damages.

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NB: Unlike in the Law of contact where we were concerned with express statements

made by the parties; here we are concerned with the conditions and warranties

implied into contacts for the sale of goods by the sale of goods Act, Cap. 214,

and how they are defined by the Act.

The Act does not define a condition but a condition may be said to be a material term

or provision which, while going to the root of the contract, falls short of nonperformance.
A warranty is defined under S. 2 (1) of the Act as an agreement with reference to

goods which are the subject of a contract of sale; but collateral to the main purpose of

the contract, the breach of which gives rise to claim for damages, but not the right to

reject the goods and treat the contract as repudiated.

It should be understood that although the Act uses the word “collateral” which gives

the impression that a warranty is a term outside of the contract, a warranty in the

intention of the Act is a term vide the contract but of a minor description which does

not go to the root of the contract.

How to distinguish a warranty from a condition?

The Act does not say how we are to distinguish between conditions and warranties.

Under S. 13 (1) (b) whether a stipulation is condition or a warranty depends in each

case on the construction of the contract.

- We can looks at the surrounding circumstances and contract to establish whether a

provision is a condition or a warrant.

- It should be borne in mind that a stipulation may be a condition, though called a

warranty in the contract.

- Furthermore, where a contract of sale is subject to any condition to be fulfilled by

the seller, the buyer may waive the condition, or may elect to treat the breach of

such condition as a breach of warranty, and not as a ground for treating the contract

as repudiated. (S. 13 (1) (a).

part thereof, the breach of any condition can be treated as breach of warranty and

not as a ground for rejecting the goods and treating the contract as repudiated

unless there be a term of contract express or implied to that effect.

- Where the conditions’ or warranties’ fulfilment are excused by law or reason of

impossibility or otherwise they cannot be affected by the Act S. 13 (2).

Implied conditions and warranties in a contract of sale includes the following:

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A: TITLE (1) Conditions as to title: Unless the circumstances show

different intention, there is an implied condition on the part of

the seller that in case of a sale he has the right to sell the goods,

and in case of an agreement to sell, he will have the right to sell

the goods at the time when the property is to pass. S. 14 (a), (see

also Rowland v. Divall, 1923) in which it was held that a person

who buys goods to which the seller has no title, is allowed to

recover the whole of the purchase price even though he has had

some use and enjoyment from the goods before the is

dispossessed by the true owner.

(2) Warrants as to title:

contract are such as to show a different intention, there

is an implied warranty that the buyer shall have and

enjoy quiet possession of the goods. S. 14 (b).

(ii) Encumbrances: Unless the circumstances of the

contract are such as to show a different intention, there

is a implied warranty that the goods shall be free from

any charge/encumbrance in favour of any third party,

not known or declared to the buyer before or at the

time when the contract is made 14 (c).

B: TIME: (a) Payment: The Act provides that, unless a different intention

appears from the contract by stipulations, the time of payment is not

deemed to be of essence in a contract of sale. Whether any other

stipulation as to time is of essence in the contract or not depends upon

the terms of the contract S. 12 (1). The effect of this seems to be that,

failure to pay on time is a breach of warranty rather than a breach of

condition.

However, the seller can provide expressly for right of re-sale in the absence of

prompt payment and this right is implied where the goods are perishable. In this

case prompt payment is a condition rather than a warranty

The Act is silent on the time of delivery of the goods. But English

cases show that where time for delivery is fixed by the contract, failure

to deliver or allow collection on time is a breach of condition and the

buyer can reject the goods seen though they are not damaged or in any

way affected by the delay. (Re: Bowes v. Sand, 1877).

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However, the time of delivery may be waived by the buyer and such a

waiver is binding even though the seller has given no consideration for

it. Re: Richards (Charles) Ltd. v. Oppenheim (1950).

C: QUALITY AND FITNESS:

Generally the contracts of sale are governed by a latin maxim Caveat Emptor

which means buyer beware. That whoever buys must be aware of all defects

obtainable in the goods.

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 except as provided

by the statute – S. 16.

These exceptions