Chapter 12 - Sale of goods. In this chapter you should understand: the main statutory and common-law rules relevant to the sale of goods; the difference between specific, unascertained and future goods; the difference between contracts for the sale of goods and agreements to sell; the definition of a contract for sale of goods;…
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Copyright 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning Copyright © 2000 McGraw-Hill Australia Sale of goods Chapter 12 Copyright 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning Sale of goods • Sale of goods is a contract Copyright 12-3 Copyright © 2000 McGraw-Hill Australia 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning Sale of goods Relevant legislation: relevant State Acts Requirements of legislation • Contracts must include consideration to be covered by legislation • Ownership of goods must pass to the buyer • Only covers contracts for sale of goods, not for work done or materials supplied, otherwise the provisions of the Sale of Goods Act cannot be relied upon • Must be evidenced in writing Copyright 12-4 Copyright © 2000 McGraw-Hill Australia 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning Types of goods • Determine point in time at which ownership will pass to the buyer, along with the “risk” associated with those goods - Specific goods » in existence » identifiable at time of contract - Unascertained goods » described » not identifiable at time of contract - Future goods » to be acquired by the seller » manufactured by seller after contract made Copyright 12-5 Copyright © 2000 McGraw-Hill Australia 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning Definitions • Sale - Property or title in the goods passes to the buyer at the time the contract is made • Agreement to sell - Title or property in goods is to pass at some point in time after the contract is made Copyright 12-6 Copyright © 2000 McGraw-Hill Australia 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning Sale of goods Covers • Goods - the delivery of the goods is the main substance of the agreement not • Work done or materials supplied involves skill and effort with goods resulting from the effort Copyright 12-7 Copyright © 2000 McGraw-Hill Australia 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning Property or possession? Property in goods • Ownership or title to goods, i.e risk of goods Possession in goods • Custody or control of goods Copyright 12-8 Copyright © 2000 McGraw-Hill Australia 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning When property (and risk) in goods passes, ownership passes Type of goods - indicates when property or title in goods passes to buyer • Specific/ascertained - At time parties intend it to pass, considering: - terms of contract - conduct of parties - circumstances • Unascertained/future - At time goods become identifiable and buyer has been notified, or when the parties to the contract of sale intend that it should pass Copyright 12-9 Copyright © 2000 McGraw-Hill Australia 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning Specific rules for determining when property in goods passes When contract made Rule 1: Unconditional contract for specific goods When goods are in a deliverable state Rule 2: Specific goods that Buyer has been notified need to be placed in a deliverable state Rule 3: Specific goods that need When goods have been weighed or measured weighing or measuring to obtain Buyer has been notified their price Buyer communicates approval or acceptance Rule 4: Goods purchased on approval of the goods to the seller or Buyer does not communicate approval or acceptance to the seller but - keeps goods without notice of rejection - on expiration of any specified time - on expiration of reasonable time Goods in deliverable state Rule (1): Future or Unconditionally appropriated unascertained Buyer assents When delivered to a carrier Rule (2): Delivery of future or unascertained goods to a carrier Copyright 12-10 Copyright © 2000 McGraw-Hill Australia 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning Romalpa clauses Retention of title clauses - Buyer cannot claim title before full payment has been received Copyright 12-11 Copyright © 2000 McGraw-Hill Australia 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning Nemo dat rule The seller of goods cannot pass better title than they actually have Copyright 12-12 Copyright © 2000 McGraw-Hill Australia 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning Seller without title • • • • Estoppel Mercantile agent Sale by a seller still in possession Sale by a buyer in possession (without title) • Statutory and common law power of sale • Sale in the market overt • Sale under voidable title Copyright 12-13 Copyright © 2000 McGraw-Hill Australia 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning Estoppel If the owner creates an impression by word or conduct that another party has the authority to sell the goods, and a purchaser buys those goods in good faith without knowledge of the deficit in title, for value, the purchaser will gain good title Copyright 12-14 Copyright © 2000 McGraw-Hill Australia 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning Rules regarding delivery • Duty of seller to deliver - place of delivery - time - timing - third person in possession - expenses - carrier - delivery by sea - quantity - instalment deliveries Copyright 12-15 Copyright © 2000 McGraw-Hill Australia 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning Shipping contracts CIF (Cost Insurance Freight) • Price includes – cost of the goods – insurance (seller organises) – freight (seller organises) FOB (Free On Board) • Price includes – cost of the goods – delivery on board ship – insurance (buyer organises) – freight (buyer organises) Copyright 12-16 Copyright © 2000 McGraw-Hill Australia 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning Rules regarding acceptance • • • • Seller notified Reasonable time Conduct of buyer Rejection Copyright 12-17 Copyright © 2000 McGraw-Hill Australia 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning Rules regarding payment • Pay correct amount on delivery - contracted price or - reasonable price Copyright 12-18 Copyright © 2000 McGraw-Hill Australia 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning Implied conditions Breach will terminate contract and allow damages to be claimed • As to title: -seller has rights to sell the goods Cannot be excluded for consumer • As to correspondence with description: - goods correspond with the description where goods have been sold by description • As to merchantable quality: - fit for a purpose for which goods of that description are normally used, unless an examination by the buyer should have revealed any defect • As to fitness for purpose: - where the buyer buys goods in reliance upon the seller’s skill, after purpose of good known • As to sale by example: - bulk corresponds with the sample supplied - reasonable opportunity to compare bulk of goods to the sample - goods will not be defective Copyright 12-19 Copyright © 2000 McGraw-Hill Australia 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning Implied warranties Breach will enable the innocent party to claim damages: • the buyer shall have quiet possession • the goods shall be free of any undisclosed encumbrances Copyright 12-20 Copyright © 2000 McGraw-Hill Australia 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning Remedies for breach of contract for sale of goods Rights of the unpaid seller • Against the goods: - Right to withhold delivery - Right to a lien (possessory) - Right to stop goods in transit - Right to resell the goods • Against the buyer (breach of contract): - Sue for damages - Sue for the price Copyright 12-21 Copyright © 2000 McGraw-Hill Australia 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning Remedies for breach of contract for sale of goods Rights of the buyer • Damages for non-delivery of goods • Breach of warranty of quality • Specific performance Rescission of contract Copyright 12-22 Copyright â 2000 McGraw-Hill Australia 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning ...Sale of goods Chapter 12 Copyright 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher Slides prepared by Kay Fanning Sale of goods • Sale of goods... carrier - delivery by sea - quantity - instalment deliveries Copyright 1 2- 15 Copyright © 2000 McGraw-Hill Australia 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e... delivery - contracted price or - reasonable price Copyright 1 2- 18 Copyright © 2000 McGraw-Hill Australia 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher