COMMERCIAL LAW

13:08:14 (Week)
References:
Peter Atiyah Sale of Goods
Prof R. Goode Commercial Law
Sealey & Hooley Commercial law
Kwadwo Owusu Business Law
Introduction
A sale of good is a contract between a seller and a buyer. So the basic foundation of sale of
goods is contract law. But there are legislation regulating the common law pertaining to
contract. Contract law as common law and statutory law are two main laws on sale of goods.
There are other pieces of legislation regulating sale of goods legislation on certain
categories of transactions in goods (Food and Drugs Act now replaced by Public Health Act).
Although such laws are basically to regulate public health, they have an impact on commerce.
Sale of Good and Hire Purchase are two main areas of commercial law.
Sources of Law
Two main sources of law for sale of goods are common law and statute. Historically, the
common law source emerged from an ancient body of law called Lex Mercatoria or Law of
the Merchant. It is the oldest law dating back to the Roman Empire.
Definition of sale of goods contract
Section 1 (1) of the Sale of Goods Act (Act 137) defines sale of goods 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.
Note the exchange of consideration in this contract. Seller agrees to transfer the property
(ownership/title) in the goods to the buyer for a consideration called price, consisting wholly
or partly of money. It can be between total strangers, part owners of a property (section 1
(3)), etc. The sale can be absolute or conditional (section 1 (4)). A contract of sale has the
same effect as the sale itself. Contract in sale is done in same way as contract offer and
acceptance. So all the rules pertaining to the formation of contract also apply to contract of
sale.
Scope of application
The Sale of Goods Act applies to every contract for the sale of goods in Ghana, including
contracts entered into, by or on behalf of the government (s. 79). It also covers contracts
between private parties (s. 78). Section 80 says the rules of the common law and customary
law, except where they are inconsistent with the provisions of the Act, also apply to a sale of
good contract. It goes without saying that the sale of good is contract and a contract is
common law.
What are goods?
Section 81 of Act 137 defines goods as moveable property of every description, including
growing crops or plants and other things attached to and forming part of the land which are
agreed to be severed before sale.

A classic example of a distinction between a sale of goods and sale of services is Lee v.
Griffin (1861/63) AELR, 191. A dentist entered into a contract to make artificial teeth
(dentures) for an old lady but the old lady died before the dentist could deliver the denture.
But he had almost finished and denture was customised. So he wanted to be paid and so he
went to court. The court decided the contract had not been performed before the buyer died,
meaning contract had been frustrated on account of the death of buyer.
In Robinson v. Graves (1935)1 IKB 579, a young lady went to an artist to have her portrait
painted. She had to go for sittings for the artist to have her portrait painted. But along the line,
the lady changed her mind. The painter wanted to be paid but the lady refused and the painter
went to court. It was decided that it was a sale of service in the form of work and labour to
produce painting of a portrait. So it was not sale of good. But the lady was still in breach of
the contract by not allowing the painter to complete the job and so she was liable to pay
damages for the labour expended by the painter. That contract was not governed by the sale
of goods principle. The judge relied on Clay v. Yates to determine the liability of the
customer.
In Clay v. Yates, a printer who was printing a book for publication stopped printing when he
discovered that the book contained some libellous materials. But he still wanted to be paid for
the work done. Printer went to court and court upheld his case. He was granted compensation
on the quantum merit principle (paid for work done in percentage terms).
Capacity to buy and sell
s. 2 (1) says capacity to buy and sell is governed by the general law which says a minor is not
bound by a contract unless its for necessaries.
s. 2 (2) says where necessaries are delivered to a person under contract which is void because
of that persons incapacity to contract, the minor is bound to pay a reasonable price for that
necessaries.
Auction sales
In an auction, the offer to buy is made through bidding, and a sale is normally made to the
highest bidder by the fall of a hammer. Core principles of rules governing auction were
originally reflected in section 4 of the Sale of Goods Act.
s. 4 (1) (a) where goods are brought for sale in lots, each lot is prima facie deemed to be the
subject of a separate contract of sale.
s. 4 (1) (b) The sale is complete when the auctioneers hammer falls.
s. 4 (1) (c) Until the hammer falls, any bidder can retract his bid. The auctioneer may also
withdraw the goods.
s. 4 (1) (d) There are instances when the auction is offered without reserve, that is, there is
no fix price put on it and so the highest bidder gets the goods even if auctioneer doesnt
accept it.
s. 4 (1) (e) The seller or anyone on his behalf may make a bid if there is an expressly
reserved price for the sale of good.

s. 4 (1) (f) Where the sale is notified to be subject to a reserve price, it shall be lawful for
the seller or any person on his behalf to make one bid and no more; and such bid shall be
openly declared at the auction before any other bid is received.
s. 4 (2) Where there is a breach of any of these rules, the buyer may treat the goods as
fraudulent and opt out.
Auctions Sales Law, 1989 (PNDCL230)
Read s. 4 and PNDCL230 and consider how to resolve conflict arising between the two laws.
20:08:14
Categories of goods and prices.
There are two main goods under s. 5 of Act 137 specific goods and unascertained goods.
Specific goods are "identified and agreed upon before or at the time of sale of the
goods". Goods in a market, etc. are specific goods, while unascertained goods are undefined
but sold on description such as buying something based on a sample.
s. 5 Specific and Unascertained Goods.
(1) The goods which form the subject of a 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.
(2) There may be a sale of goods to be manufactured or grown or acquired by the seller
after the making of the contract. These are unascertained goods.
(3) There may be a sale of goods the acquisition of which by the seller depends upon a

contingency which may or may not happen. For instance, the seller may be a dealer of
certain goods who sells on bases of description or sample bases on what he's waiting
for from the manufacturer to sell to the final consumer. If one does not receive the
goods, he is not obliged to pay and may sue for non-supply even though he hasn't
paid.
In section 5, there is also a category of goods not mentioned as a third type which is
ascertained goods and similar to specific goods but not unascertained goods. s. 81, which is
the interpretation section of the Act, defines ascertained goods differently from specific
goods. It defines ascertained goods as "goods identified and agreed upon after a contract
of sale is made". Specific goods, on the other hand, are defined as goods identified on or
before the sale of the goods.
After the goods are ascertained, then title could pass to the buyer. If one buys goods, the
seller is obliged to supply the same goods and nothing else and if the supply is different, it
means the seller is in breach of contract. Specific goods should leave no doubt about the
certainty of the goods. In respect of unascertained goods, if, after a sample had been agreed
upon and majority of the goods supplied by the seller conform with the agreed sample, the
seller will be deemed to have performed his contract. But if the delivery does not
substantially conform with the sample, the seller will not be deemed as having performed his
obligation.
Prof. Goodes defines unascertained goods as future goods because their delivery is in the

future. Specific goods are delivered in the present. The concept of future goods is defined in
section 5.
s. 6 The Price.
(1) The price in a contract of sale may be fixed by the contract or may be left to be fixed
in a manner agreeable to the parties, or may be determined in the course of dealing
between the parties.
(2) Where the price is not determined in accordance with the foregoing provisions the
buyer must pay a reasonable price. What is a reasonable price is a question of fact
depending on the circumstances of each particular case. This means the exchange of
goods termed as butter is not a sale of goods although it is a contract.
s. 1(1) of Act 137 says consideration should be wholly or partly of money. We got this from
the common law but the Americans are innovative in this respect. Under s. 2- 304 (part or
chapter) of the Uniform Commercial Code of the USA, unlike in the British and Ghanaian
laws, goods "can be made payable in money or otherwise."
s. 7 Agreement to Sell at Valuation.
(1) Where there is an agreement to sell goods on terms that the price is to be fixed by the
valuation of a third party, and the third party cannot or does not make such a
valuation, the agreement is avoided.
If the third party is prevented from doing so by either the seller or the buyer, the other party
can sue the party that third party from doing so.
(2) Where the third party is prevented from making the valuation by the fault of the seller
or buyer the party not in fault may maintain an action for damages against the party in
fault.
Duties of a seller
The fundamental obligation of the seller is to deliver goods that conform to the contract. In a
sale of specific goods, the fundamental obligation of the seller is to deliver the same goods to
the buyer. s. 8(1).
Fundamental Obligation of the Seller
s. (8) - Fundamental Obligation of the Seller.
(1) In a sale of specific goods the fundamental obligation of the seller is to deliver those
goods to the buyer.
(2) In a sale of unascertained goods the fundamental obligation of the seller is to deliver
to the buyer goods substantially corresponding to the description or sample by which
they were sold.
(3) Any provision in a contract of sale which is inconsistent with, or repugnant to, the
fundamental obligation of the seller, is void to the extent of the inconsistency or
repugnance.
These provisions deal with the identity of the goods not the quality of the goods. Sometimes
the identity of goods is a feature of its identity and that quality is different from the one really
bought. For instance, the features of Mercedes Benz may be similar to those of a Tata car but
their quality are different. Any attempt by the seller to run away from his duty is void. In
future goods, the law allows a little variation of future because of any eventualities. De
minimis non curat lex means the law is not concerned with trivial issues.
4

Quality of goods
The quality of the goods that we buy and sell is dealt with the implied terms under the
contract of sale of goods. It could be conditions or warranties. Condition is fundamental in
contract to which a breach will make the contract void, while warranties are minor terms
which do not go to the root of the term but they allow you to sue for damages. Implied means
implied by law and expressed by the parties. There are situations where a buyer sees a
contract as term and will not want to see it as void and rescind the contract, he can quantify it
and sue for damages. Contract reflects the choice of the parties and the performance must
also reflect the condition of the contract. If a party wants to void the contract for breach of
warranties, why would the court want to stop that? The courts are now using the innominate
terms to solve a problem not on whether it is a condition or warranty and the courts now tie
the decision to be made by the parties as to what to sue for and not what they are expected to
sue for according to the law. So it is still permissible to seek for damages in breach of
conditions or seek to nullify a contract of warranties as he or she wants without any pressure
to follow what the law says. In short, it is flexible. The law simply calls it implied terms not
conditions or warranties.
s. 9 Implied Condition that Specific Goods are in Existence.
In a contract for the sale of specific goods there is an implied condition on the part of the
seller that the goods are in existence at the time when the contract is made.
s. 10 Implied Undertakings as to Title.
(1) In a contract of sale there is an implied warranty on the part of the seller that he will
have a right to sell the goods at the time when the property is to pass.
This is an implied warranty that the seller has the right to sell addresses the issue that he can
transfer the property in the goods to the buyer. In reality it should be an implied condition not
an implied warranty. The right to pass a goods is fundamental in a contract of sale of goods.
This section is correct in statute but in reality, it is not true because it should be treated as a
condition and not a warranty. As noted earlier, the courts have moved from the concept of
being strict on the parties to comply with some rules and allow the parties to choose what to
sue for.
(2) The provisions of subsection (1) are not affected by any agreement to the contrary
where the goods are of a description which are supplied by the seller in the ordinary
course of his business. Example is sales by a merchant or a trader. The seller should
not be able to depart from his fundamental obligation.
s. 11 Sale by Description.
In a contract for the sale of goods by description, whether or not the sale is by sample as well
as by description, there is an implied condition that the goods shall correspond exactly with
the description.
s. 12 Sale by Sample.
In a contract for the sale of goods by sample, whether or not the sale is by description as well
as by sample, there is an implied condition that the goods shall correspond exactly with the
sample.
NOTE: s. 11 and 12 talk about sale of unascertained goods.
5

27:08:14 (Week 3)
Tutorials
Q1:
1. Introduction Make reference to the definition section of the Sale of Goods Act in s.
1. The definition could be divided into various elements;
a. Agreement to sell it doesnt necessarily mean the formation of a contract and the
conveyance of title coincide at the same time.
b. Transfer of property its about transferring possession of goods but not
ownership.
c. Goods s. 81 gives definition of goods. See Dobson v. North Tyneside Health
Authority; Lee v. Griffin; Robinson v. Graves.
d. Consideration Q2:
From s. 5 of the Act, goods can be classified into specific goods and unascertained goods. See
Re Londonwine; Re Gold Corp; Re Wait.
Evolution of law in respect of quality
The guiding principle under quality was caveat emptor (buyer beware). In other words,
buyers buy at their own risk in terms of quality and suitability of goods. Eg. if a buyer buys
some bags of rice and upon reaching home he realises there are maggots in them, he will have
no remedy under the common law. But over the years, this principle was deemed to be unfair
to buyers, so the common law introduced exceptions. The British Sale of Goods Act, 1893,
introduced a range of caveat emptor. In other words, the principle was not abolished but
modified. When Ghana passed the Sale of Goods Act, 1962, those exceptions were
transferred.
Quality of goods
s. 13 (1) deals with the quality of goods. It states in clause 1 that there is no implied condition
or warranty on the quality or fitness of goods for any particular purpose. It basically preserves
caveat emptor.
The first exception is s. 13 (1) (a): There is an implied 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. It doesnt matter whether the goods contain some defects. These types of defect are
called latent or hidden defects. So the first protection that buyers have is that when they buy
goods, they have an assurance that there are no hidden defects. If there are defects not known
or declared to the buyer, the buyer has grounds to seek remedy.
In Godley v. Perry 1960 1 AER 36, a man bought a catapult for his son but the material of
catapult was spoiled. So when the son was using it, the catapult broke and the stone in it hit
the eye of the boy. The court held that the defect was latent and not known to the buyer at the
time of sale and therefore the seller was held in breach of an implied warranty.
In Wren v. Holt, someone bought bear and realised it was contaminated with acidic. The
court held that there was a hidden defect and so there was a breach of implied condition. In
the absence of the provision in the law, a seller could plead caveat emptor.
So s. 13 (1) (a) reasserts caveat emptor, while s. 13 (1) affirms it.

In Griffits v Conway Ltd (1939) AER 685, a young lady bought an overcoat from a shop and
upon wearing it she developed severe dermatitis (skin disease) that was attributed to the
overcoat. She sued under the protection that the law provides against hidden defects, but she
lost the case because evidence indicated that the reaction she suffered was peculiar to her
only and that all the others who bought the coat did not suffer similar skin problem. So while
that protection was valid for majority of people, if there is one exception, it is an abnormality
that the law does not protect.
In Business Appliances Specialties Ltd v. Nationwide Credit Corporation (1988) TLR 32, it
was held that the implied condition on the quality of health of goods applies to sales of used
or second-hand goods. So whether the goods are new or used, it doesnt matter. But if its a
used car, the level of protection will be less. However, under s. 14 (3) of the Hire Purchase
Act, 1974, it is possible for the parties to exclude the implied condition of warranty on quality
and fitness from higher purchase contracts on second-hand goods.
s. 13 (1) (a) says buyers are protected from implied conditions. But 13 (1) (a) (i) says the
implied condition on hidden defects does not apply where the buyer examines the goods. In
other words, the law says when you examine goods and there are defects you should have
seen, we go back to caveat emptor. This exception in actual fact still preserves the protection
against hidden defects. Examination of the goods alone does not remove the protection
against hidden defects.
In Thornett v. Beers (1919), a company sent a staff to buy industrial glue. The staff was
shown the glue and given the opportunity to examine the glue. He made a cursory
examination of one barrel. So the company bought the glue but found out later that it was not
suitable for the purpose for which it was bought. The company sued and the court held that
the staff of the plaintiff had the opportunity to examine the goods and so he could have
detected the defect in the glue. In other words, they treated the defect as something that was
not hidden. And, therefore, the buyers were not protected under the implied condition that the
goods are free from defects. Nevertheless, there are cases where the court will say that the
examination of goods means the buyer is not protected. That carries the principle in Thornet
v Beers too far.
s. 13 (1) (a) (ii) says in a case of a sale by sample, the implied condition of quality and fitness
does not apply in respect of defects which could have been seen from reasonable examination
of the sample. Here, again, we go back to caveat emptor so the exception in s. (1) (a) does
not apply.
s. 13 (1) (a) (iii) says the implied condition on quality and fitness does not apply where the
goods are not sold by a seller in the ordinary course of his business. The whole concept of
caveat emptor and its exceptions are designed as a way of consumer protection against some
practices of business men or sellers or traders.
The concept of sales in the ordinary course of business shows that caveat emptor was
designed to protect buyers from traders. Burnby v Bollet (1847) 11 JP 790 illustrates the
concept more clearly. The facts of the case were that a farmer went to sell his goods in a
public market. While going to set up his store, he saw the carcass of a pig hanging at a
butchers shop, obviously being offered for sale. The farmer then enquired from the butcher
whether the pig was for sale. The butcher said yes, and so they bargained and the farmer paid
for it but he asked the butcher to keep it for him as he went to another store to sell his goods.
7

In the course of the day, another farmer came along and wanted to buy the carcass of the pig
but the butcher said he had already sold it to the first farmer. The second farmer then went to
the first farmer to bargain and the latter agreed and sold it for profit to the second farmer after
which they informed the butcher. The second farmer later took the carcass home but he
realised it was rotten.
Held:
The plaintiff submitted in his statement of claim, inter alia: The defendant publicly offered
for sale the carcass of a pig for food of man and thereby falsely and fraudulently undertook
and warranted that the said carcass was in a sound and wholesome condition and fit for
human consumption whereby the plaintiff was induced to buy the said carcass at the sum of
6.18s and 6 pence, whereas in truth and in fact, the said carcass was not sound for human
condition and good for consumption but on the contrary thereof was unsound and
unwholesome.
In those days, in order to overcome the defence of caveat emptor, the buyer had to prove
fraud or deception on the part of the seller. It was the first avenue by which the court created
exception to caveat emptor, hence, the formulation of the statement of claim in the manner
couched by the plaintiff. But the court held that the implied condition of quality and fitness
only applied in the sale of the ordinary course of business and that the sale that was applied
was made in the ordinary course of the butchers business. But under the circumstance, the
seller in that particular situation was a farmer and so the sale he made to the second buyer
was not a sale under the ordinary course of business and therefore, the pleading of fraud did
not apply. If the second farmer had bought the pig directly from the butcher, he could have
recovered. But in the circumstance of the case, caveat emptor was applied.
s. 13 (1) (b) says where the goods of the description sold in the ordinary course of business
and the buyer by express implication makes known to the seller the purpose of the goods,
there is an implied condition. See Priest v. Last (1903) 2 QB 148. It was held in that case
where a buyer makes a claim, either expressly or impliedly, there is an implied condition that
the goods are fit for that purpose.
s. 13 (2) says the condition implied by s. 13 (1) (a) is not affected by any provision to the
contrary in the contract of sale. In other words, you cannot use an exemption clause to escape
that implied condition.
03:09:14 (Week 4)
Tutorials
Stevenson v. Rogers (1999) Fisherman & fishing boat
CAVEAT EMPTOR
The Principle of Ordinary course of Business
Rockson v. Armah (1975) 2 GLR 116. Read Rockson v. Armah (1975) 2 GLR 116: A case
of caveat emptor or, caveat venditor or neither, by Prof. JEA Mills, UGLJ 1978. The
reference of caveat emptor in this article raises other issues in an article by K. K. Anang,
UGLJ 1967. They both established the fact that we have caveat emptor plus some exceptions
and that we have not discarded caveat emptor for caveat venditor.
Read Birch v. Asempa & Another (1992)

s. 13 (1) (b) addresses situations where goods are sold by a seller in the ordinary course of
business and a buyer comes in to request for goods. He may specify the purpose for which he
is buying the goods but its not always the case. If you even dont state the purpose, the
purpose of the sale can be deduced from the circumstances of a particular sale. The law says
in all those circumstances, the goods must be fit for the purpose for which they are sold. So
emphasis is not on whether the buyer declares the purpose but that the goods are fit for the
purpose they are sold.
s. 13 (2) says there is an implied condition that goods sold are reasonably good for the
purpose they are sold. The exclusion of statutory provision is not valid unless it is disclosed
to the buyer. So the section protects buyers against sellers to exclude the implied conditions
of warranty on the fitness of goods.
s. 13 (3) says an implied condition of warranty on the fitness or quality of goods may be
annexed by usage of trade (customary trade). That is, if in an established trade, there is an
implied condition of sale which is annexed to the contract, it becomes part of the contract.
The level of scarcity in any particular market makes the statutory protections more valuable.
So the value of implied conditions and warranty depends on the level of competition of the
market.
s. 13 (4) deals with express warranties. They do not negate a warranty or condition implied
by the Act. They give extra protection of goods bought.
s. 13 (5) says the implied condition of warranty on quality and fitness apply to all goods
delivered in purported pursuance of a contract and extend to all boxes, taints, bottles or other
containers in which the goods are sold. That means the packaging or containers which contain
the goods must also be fit for the purpose for which the goods are sold.
A case in point is Geging v Marsh (1920). It was a case of bottled water under pressure. It so
happened that the bottle in which the soda was contained exploded while the customer was
trying to use the product. Plaintiff sued and court held that implied condition of warranty on
quality of product also applied to the container of product.
Implied conditions of warranty on quality and fitness are addressed to sellers of goods. But
do they apply to third parties? This question was addressed in Neoplan Gh Ltd v. Harmony
Construction Ltd (1995/96) 1 GLR. Harmony had bought a truck from a company abroad.
The purchase came with a written warranty for servicing of the truck over a period of time.
The written warranty listed a number of outfits where the truck could be serviced in various
parts of the world. The truck later developed a problem and Harmony sent it to Neoplan
which identified the problem and informed Harmony about it. Neoplan then prepared a job
card for Harmony which it signed. The job card was deemed as an agreement. Neoplan
finished the job and presented a bill to Harmony but Harmony thought it was too much so it
decided not to pay, citing the warranty. But Neoplan said it did not give warranty and had a
contract with Harmanoy per the job card. The issue in court was whether Neoplan was bound
by a warranty given by another company. The court said Neoplan had nothing to do with the
warranty, neither was it a seller or agent of the company that sold the truck. This affirmed the
principle that a third party is not liable under the implied conditions of quality and fitness
Main themes s. 13
Caveat emptor The law protects buyers against hidden defects but gives exceptions
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Caveat emptor modified, not replaced. We dont have caveat venditor

Delivery of goods
Delivery is defined in the definitional section of the Act (s. 81) as voluntary transfer of
possession from one person to another. This corresponds with the fundamental obligation of
the seller in s. 8, who is to deliver goods that conform to the contract to the buyer. In respect
of specific goods, that obligation is to deliver those same goods and in respect of
unascertained goods it must be goods that substantially correspond. In Chanter v. Hobkings,
Lord Habinger said if you contract to sell peas you cannot oblige the other party to accept
another thing. That emphasises the point that the goods that you contract must be delivered.
Transfer of possession creates a bailment. If you transfer possession of property to another
person, he is a bailee and you are a bailor. He has possession of your property but you are
the owner. The bailee has a duty towards the bailor. One element in the Neoplan v. Harmony
Case is the concept of bailment.
s. 14 (1) says where the seller delivers goods to the buyer and the quantity of the goods is less
than what he contracted to sell, the buyer may reject them (because the goods dont conform
to the contract). But the buyer has the option to accept those goods and pay for them at the
contract rate.
In Behrend & Co v. Produce Brokers, the buyer ordered 576 tons of cotton seed, which is
used in the manufacture of cotton seed oil, to be delivered in London by ship. The goods
were all paid for ahead of time. The sellers sent the goods but there was a problem with their
packaging and so when the goods arrived they were only 37 tons. The others were packed at
the bottom with other goods packed on them. So the ship went to another port before coming
back to deliver the remainder of the goods. The buyer rejected the goods and went to court. It
was held that the first goods were less and the buyers could have rejected the 37 tons but they
accepted them. The second goods were also not conforming. So the sellers were held in
breach for the delivery of the second goods but the buyer was made to pay for the first
delivery and take a balance as refund.
s. 14 (2) says when the seller delivers the goods that are more than the goods contracted for,
the buyer may not reject the whole delivery by virtue of the non-conformity but he has the
following options:
a. He may accept all the goods and pay for the extra at the contract rate. That is
considered to be a new contract modifying the old one
b. He may accept the quantity contracted for and reject the rest. In the latter
event, he may recover damages on the cost, if any, of separating the
contractual goods from the non-contractual goods. Hart v Mills (1846)
s. 14 (3) deals with situations where the seller delivers to the buyer the goods that he
contracted to sell together with goods of a different description that is not included in the
contract. Note that in all cases of non-conforming delivery, the buyer has no obligation to
accept. But in this circumstance, the buyer has the following options:
a. He may accept all of them
b. If the goods contracted for and delivered are less than the quantity agreed
(shortage) same principle applies

10

c. The buyer may accept the goods contracted for and reject the remainder. In that
case, he may reject the non-contractual goods, accept the contractual goods and
claim damages for cost of separation.
10:09:14 (Week 5)
Tutorials (No lecture)
17:09:14
Time of Delivery
The definition of delivery is deficient to the extent that it does not transfer possession in the
property.
s. 15 (1) says delivery is invariably concurrent with payment unless otherwise agreed.
s. 15 (2) says delivery may be treated as ineffectual unless made at a reasonable hour. Eg. if
you buy a set of furniture and there is an agreement that requires the seller to carry the goods
to your house and he arrives at midnight, it is not deemed to be effectual. So delivery must be
agreed at a reasonable hour.
s. 16 (1) says if no time is fixed for the delivery, the goods must be delivered at a reasonable
time.
s. 16 (2) says unless a contrary intention appears, stipulations as to the time of delivery are
conditions of the contract, meaning they are an important term of the contract.
s. 16 (3) says the parties may agree that delivery should be made at a time and date other than
what is originally stipulated. So it basically recognises that the parties can vary their original
agreements on the time of delivery.
All these provisions reflect the importance attached to time in the Western World because
time is money for them.
Expense or Cost of Delivery
s. 17 says unless otherwise agreed, the expenses of and incidental to putting the goods in a
deliverable state must be borne by the seller. So its basically the sellers obligation to prepare
the goods for delivery.
Mode or Means of Delivery
s. 18 (1) says unless otherwise agreed, the seller may deliver the goods to the buyer by
transferring to the buyer;
a. The actual physical control over the goods
b. The means of obtaining actual physical control over the goods
c. The seller transferring the documents of title of the goods to the buyer, the documents
of title representing ownership of the goods.
s. 18 (2) says delivery of the goods to the buyers agent or to his order constitutes delivery to
the buyer unless a contrary intention appears. An agent represents a principal so what the
agent does is on behalf of the principal.

11

s. 18 (3) says delivery to a carrier for transmission to the buyer is delivery to the buyer unless
a contrary intention appears. A carrier is not always an agent of the buyer but here, he is being
treated as an agent to the extent that delivery to that carrier is deemed to be delivery to the
buyer. To be on a safe side, buyers must indicate whether they accept delivery by carrier,
otherwise it is deemed to be delivered.
s. 18 (4) says where the goods are with a third party and that third party acknowledges to the
buyer that he holds the goods on behalf of the buyer, that acknowledgement by the third party
is deemed to be delivery to the buyer, unless there is a contrary intention. It further states that
none of these means afore-examined affects the operation of documents of title. That is to say
the effectiveness of documents to title depends on the documents of title themselves. The
documents of title must be an effective means of transferring ownership of title. So a
defective document of title cannot be deemed to be transfer of title.
The Place of Delivery
s. 19 says the place of delivery is the sellers place of business. If the seller has no place of
business, the place of delivery is deemed to be his residence unless a contrary intention
appears. All of them are subject to contrary intentions. A contrary intention may be an
agreement for the seller to carry the goods to the buyer.
Despatch of goods
s. 20 (1) says where the seller is required to send the goods to the buyer by a carrier, there is
an implied condition that the seller shall make such contract with the carrier as may be
reasonable for that purpose. So the obligation to contract with the carrier lies with the seller.
That contract must be compatible with the original contract of sale.
s. 20 (2) says where the goods are to be sent by sea or other means of transit in circumstances
in which it is usual to insure the goods, the seller must give notice to the buyer that the goods
are being sent or are ready to be transported to enable the buyer to procure insurance in
instances where the insurance obligation is on the buyer Free on Board (FOB). But the
insurance obligation is on seller, its known as CIF. Informing the buyer will enable him to
procure insurance. If the seller does not do that, this provision implies the goods are shipped
at the sellers risk.
Transfer of property (title or ownership) in goods
s. 25 says in a sale of unascertained goods, there can be no transfer of property in the goods
to the buyer unless and until the goods are ascertained. There are two leading cases on this:
Aldridge v. Johnson (1857) 7 E & B 855; Berndston v. Strang (1868)
s. 26 (1) says the property in goods passes when the parties intend it to pass subject to s. 25
which makes the passing of property conditional on the ascertainment of the goods.
s. 26 (2) says the property in the goods passes when they are delivered to the buyer by any of
the means afore-discussed.
s. 26 (3) deals with situations where goods are delivered (voluntary transfer of possession
from the seller to the buyer) on a sale or return basis. That is, basically, delivery on the
examination and acceptance of the goods. There are many scenarios under this;

12

a. If the buyer signifies his acceptance or approval, it means property passes or does any
act adopting the transaction.
b. If the buyer does not signify his approval or acceptance of the goods and retains the
goods with possibility of return, there are two possibilities;
i.
If there is a period fixed within which the buyer is supposed to return the
goods if he does not accept and that period elapses, the property passes at the
expiration of that period.
ii.
But if no period is fixed for the return of the goods, property is deemed to pass
upon the expiration of a reasonable period, depending on the nature of the
transaction or the goods.
Transfer of Risk
This refers to the risk of loss, damage in the goods. It always lies with the owner of goods.
s. 27 (1) says the risk in goods is transferred to the buyer when the parties intend it to be
transferred.
s. 27 (2) says unless a contrary intention appears, the goods are at the sellers risk until the
property in them passes to the buyer. After the transfer of property from the seller to the
buyer, the risk of loss lies with the buyer. The risk of loss always lies with the owner.
A case in point is KLM v. The Birds, Beasts & Reptiles Agency (1967) GLR 574. BBRA was
a Ghanaian company that dealt in the sale of birds, beasts and reptiles. A foreign company
bought some animals from BBRA, which asked the buyers to have a guarantor in Ghana who
would pay for and take delivery of the animals. The buyer contracted with KLM to do that
job. KLM then wrote to BBRA to indicate that it was the agent of the buyer. On that basis, the
seller presented the goods to KLM and the airline transferred the animals to the buyer in New
York. But upon arrival, some of the animals were dead and so the buyer refused to pay.
BBRA then sued KLM.
Justice Amissah (Appeal Court Judge sitting as High Court Judge on appeal): It was deemed
to be delivery of goods and transfer of property so at the point the animals were given to
KLM, property had passed and so the loss belonged to the buyer.
s. 27 (3) says where delivery of the goods has been delayed through the fault of either the
buyer or the seller, the goods are deemed to be at the risk of the party who caused that delay
if there is a loss or damage in the goods.
s. 27 (4) says nothing in any of the provisions in s. 27 affects the duties or liabilities of either
the seller or the buyer as bailees of the goods. Bailment is when an owner of goods transfers
possession of goods to another party without transferring property. The bailee or person who
receives the goods does so for a purpose. So if the seller is holding the goods, not as owner
but as bailee, the rights and obligations of property is not affected. The risk of loss always lies
with the owner. Where the bailee is not the owner, he is not responsible for the insurance but
responsible for servicing your property and returning it.
The basic tread that runs through all the provisions is that the risk of loss lies with the owner
under the circumstances.
Transfer of property by a non-owner
13

s. ()
24:09:14
01:10:14
The Rights & Remedies of an unpaid seller
When a seller is paid, he has received the consideration for his sale and so he has no remedy.
s. 34 defines who an unpaid seller is. Its when the price of goods has not been tendered in
full or offered to the seller or where the seller has been paid with a cheque that has been
dishonoured.
Part V of the Sale of Goods Act provides two categories of rights and remedies for an unpaid
seller.
1. s. 35 provides for real remedies to the unpaid sell. That is, remedies pertained to the
goods. There are four real remedies under s. 35:
a. Lien on the goods
b. The right of stoppage of the goods in transit
c. The right of resale (first three remedies can be exercised whether or not the seller
has transferred property in those goods to the buyer)
d. The right of the unpaid seller to recover possession
s. 35 (2) says nothing in part V derogates the right of an unpaid seller where the sale is for
unascertained goods and no goods has been appropriated. On the other hand, if the sale was
for ascertained goods, the buyer can claim a contractual right and does not have to wait in a
queue for claim. Section makes a reservation in respect of unascertained goods.
Lien
s. 36 provides detains for the exercise of a Lien:
1. An unpaid seller in possession of the goods may exercise his right of a Lien until
payment or tender of the price. It is about retention of the good and so you must be in
possession of the goods. Some literature mention that a lien is holding property
belonging to someone else. But Act says it can be exercised whether or no possession
has passed to the buyer. But there are some exceptions. The seller can exercise his
right of a lien:
a. If he has not agreed to deliver the goods before payment.
b. The unpaid seller can exercise a lien if the goods has been sold on credit and the
term of the credit given to the buyer to pay has expired.
c. Where the buyer has become insolven.
s. 3 (3) says where the seller has made part delivery of the goods, he may exercise a lien on
the remainder.
s. 36 (4) says the contract of sale is not rescinded by the exercise of a lien
s. 37 deals with loss of lien
A lien is lost in the following circumstances;

14

a. If the unpaid seller delivers the goods to a carrier or other bailee for transmission to
the buyer without reserving his rights to dispose of the goods. It means if the seller
gives the goods to a carrier and tells him delivery is subject to my order, he has
retained his rights of a lien. Until he delivers goods to the buyer, he is still in
possession of the goods and so he still retains possession.
b. A lien is lost if the buyer obtains possession of the goods with the consent of the
seller. That because it removes the element of possession.
c. A lien is lost if it is waived. That is the seller by express or implied action decides not
to exercise his rights of a lien.
s. 37 (2) says a lien is not lost when the seller obtains judgment for the price of the goods.
Stoppage in transit
s. 38 deals with stoppage in transit
s 38 (1) says where a buyer becomes insolvent, an unpaid seller who has parted with
possession of the goods has the right to stop the goods in transit as long as the goods are in
transit and hold those goods until payment or tender of the price. Where there is evidence of
insolvency, the unpaid seller who has parted with possession can stop the goods in transit.
See Bendson v. Strange (1868 3 CA 588. This was a contract involving the sale of timber
from Sweden to the UK. The buyer in the UK chartered a ship to go fetch the timber from
Sweden. He insured the shipment of the goods and the seller issued a bill of laden (document
transmitting goods) to the buyer. Part of the cargo was damaged in transit and the buyer also
became insolovent before cargo arrived in the UK. Upon hearing of the buyers insolvency,
the seller gave notice to the carrier (ship) to stop delivering the goods to the buyer. Notice of
stoppage is enough to invoke the stoppage in transit. The issue was whether the seller was
entitled to stop the goods under those circumstances. In order to determine the issues the
court had to decide whether deliver of the goods on board that ship amounted to delivery to
the buyer or whether the seller had some rights over the goods despite delivery to the carried.
court decided that deliver to the ship was delivery to him as a third party intermediary and not
delivery to the buyer. Therefore, the goods were still in transit. Transit is deemed to end when
the goods are delivered to the buyer so until the buyer takes possession of the goods, the
seller is still in possession. A further question arose in the case as to whether the seller was
entitled to receive the insurance money for the portion of the goods that had been damaged.
The court ruled that the right of stoppage in transit applies to the goods in whatever condition
they were. If the good are damaged, it means the sellers property has been damaged and he
will only be entitled to insurance if he is the owner of the insurance. Hence since the
insurance was owned by the buyer, the seller has no part. A distinction must therefore be
made between the goods as they are and insurance. The entitlement of insurance money
belongs to the owner of the insurance. This is reflected in s. 42 of the Sale of Goods Act.
Note that a lien can be exercised so long as the seller is unpaid.
s. 38 (2) says the contract of sale is not rescinded when the seller exercises the right of sale in
transit. The goods must be in transit in order for the seller to exercise his right to transit. But
when does transit ends.
s. 39 (1) says the goods are deemed to be in transit from the time of delivery to a carrier or
other bailee until actual delivery (actual acquisition of possession) to the buyer. Relate this to
s. 18 (3). Read in the light of Bendson v. Strange.

15

s. 39 (2) says if the buyer obtains actual possession of the goods before their arrival at the
appointed destination, the transit is at an end.
s. 39 (3) says if, after the arrival of the goods at the appointed destination and the carrier or
other bailee still continue to be in possession of those goods, the transit is not deemed to have
ended.
s. 39(5) says when goods are delivered to a ship chartered by the buyer, the question whether
the goods are in the possession of the captain of the ship or of that carrier as an agent of the
buyer depends on the circumstances of the case. This point arose in a case called ex
parteRosevear China Cloay Company Ltd (1879) 11 CD 360.
Facts
In that case, the seller had delivered a consignment of clay for the manufacture of plates on
board a ship that had been nominated by the buyer. Before the ship left the port of despatch,
the seller heard of the buyers involvency and stopped the shipment before transit even
started.
Held
The trial judge held that delivery of the clay on board the ship nominated by the buyer was
delivery to the buyer and that the transit was at an end at that point even before it began. But
the judgment was reversed in the Court of Chancery Appeal which said delivery to that
carrier was only constructive delivery to the buyer even where the buyer had nominated that
carrier. The reason for that decision was as follows: The court said the contract of the carriage
between the buyer and the carrier by itself does not make the carrier an agent or servant of the
person to whom he had contracted. Without further evidence of an agency relationship, that
carrier is an independent contractor, not an agent of the buyer.
s. 39 (6) says the transit is deemed to be at an end when the carrier or other bailee wrongfully
refuses to deliver the goods to the buyer. The seller cannot exercise stoppage in transit under
the circumstance.
s. 40 says the seller can exercise the right of stoppage in transit by taking actual possession of
the goods or by giving notice to the carrier or other bailee in such time as to prevent their
delivery to the buyer.
s. 41 says the sellers right of stoppage in transit is subject to a lien that the carrier or other
bailee may have in respect of freight (transportation cost) that may be due on the goods.
s. 42 deals with stoppage in transit in respect of goods that have been damaged or gone bad.
If under that circumstance, there was insurance on those goods, the entitlement to the
insurance money goes to the owner of the insurance policy.
s. 43 (a) says the seller loses his right of a lien or his of stoppage in transit if he agrees to a
sale or other disposition of the goods by the buyer.
s. 43 (b) says the seller loses his rights of a stoppage in transit if the buyer resells the goods or
the documents of the goods in circumstances that will pass title under s. 32 () the first seller
loses his rights of a lien as well as the right to possession.

16

Recovery of possession
s. 44 says an unpaid seller may recover possession of the goods from a buyer:
a. If property has not passed to that buyer.
b. If property has passed but the contract of sale expressly confers the right of
recovery of possession on the seller in that particular circumstance
Right of resale
s. 45 says an unpaid seller who is in possession of the goods may resell them:
a. If the goods are perishable and the buyer does not pay for them or tender
payment within a reasonable time.
b. Where the buyer repudiates the contract and the seller accepts the repudiation
c. Where the seller gives notice to the buyer of his intention to resell the goods
and the buyer does not pay for them or tender payment within a reasonable
time.
22:10:14
Personal rights and remedies
1. Suing for the price
This arises under s. 46
a. s. 46 (1) where ownership of the goods has passed to the buyer and the buyer
wrongfully refuses or neglects to pay for the goods
b. s. 46 (3) where the date for the payment of the price has passed and the price is
unpaid. In that circumstance, an action lies whether or not property has passed.
c. s. 46 (3) where parts of the goods have been delivered and accepted by the buyer, an
action lies for a proportionate part of the price. This right or provision does not apply
to contracts that are governed by Part I of the Contracts Act, 1960 which deals with
frustration of contract. That is to say you sue for the proportion of the goods that have
been delivered.
2. An action for damages
This is an alternative right to an action for the price
a. s. 47 (1) where the buyer wrongfully neglects or refuses to accept and pay for the
goods in accordance with the contract, the seller may sue for damages. This is in a
situation where the seller has tendered the goods and the buyer, without justification,
refuses to pay.
b. s. 47 () where the goods are to be delivered in instalment and each instalment is to be
paid for separately, a separate action will lie in respect of each instalment. But where
the buyer shows an intention to repudiate the whole contract, not just a particular
instalment delivery, the seller can then sue for the whole price, not just one
instalment. The suing for damages arises in situations where the buyer has rejected the
goods
c. s. 47 ()
The principle for assessing damages under contract law apply to the assessment of rejection
of goods by the buyer. s. 48 has special assessment for this
s. 48 (1) says damages are assessed on the basis of the loss which could reasonably have
been foreseen by the buyer at the time of the contract as likely to arise from his breach of the
contract Hadley v Baxendale (1854) 9 Exch 341
17

The rights and remedies of the buyer (Part VI)

s. 49 says the buyer is entitled to reject goods tended or delivered by a seller and refuse to pay
the price or he is entitled to recover the price in the following circumstances;
a. s. 49 (1) (a) where the seller is guilty of a breach of a fundamental obligation (in
situations of fundamental breach)
b. s. 49 (1) (b) where the seller is guilty of a breach which is not of a trivial nature. This
is tricky because what is trivial to one person may not be trivial to another. If it is
trivial, the buyer cannot reject the goods but can only sue for the trivial matter.
c. 49 (1) (c) where he entered into the contract of sale as a result of a fraudulent or
innocent misrepresentation by the seller. You may also include a negligent
misrepresentation. In situation that there was a misrepresentation by the seller and that
misrepresentation led the buyer to sell the goods, the buyer can reject the goods.
Delivery by instalment
s. 49 (2) says where the contract provides for delivery by instalment and each instalment is to
be paid for separately, the buyers right to reject applies to each instalment separately. In this
scenario, each instalment can be treated as a separate contract. But there are persistent and
serious breaches by the seller in respect of the delivery. In that scenario, the buyer is entitled
to treat the whole contract as one and reject delivery. This is where the seller has proved
unreliable by making breaches in earlier instalment. In that case, the buyer can reject the
whole contract on the basis of that unreliability.
s. 49 (2) says the buyer has the same option of rescinding the whole contract if there is a
fundamental breach by the seller in respect of one or more instalments.
Breaches that are trivial or no trivial goes to the core of the principle of De miminimis non
curat ex (s. 49 (1) (b). This concept is also reflected in s. 8 on specific and unascertained
goods. Rules says if there is a slight variation between the description of goods and what is
actually delivered, the seller has met his substantial obligation. If there is a difference, it is
only deemed to be trivial. This ambiguity stems from a very old case Bowes v. Shand (1877)
2 AC.
In this case, the parties had two contracts for the sale of 600 tons of rice from Madras, India
to shipped to the UK. The parties were very specific that the rice was to the shipped on a
particular ship and in March or April. The 600 tons came to 8200 bags. But the sellers loaded
8150 bags and they were loaded on different dates in February and March and the ship
departed for London. When the goods arrived in London, the buyers rejected them for two
reason;
1. They did not amount to 600 tons
2. They were not shipped during the period agreed upon
The case went to the House of Lords and the law lords upheld the decision of the lower courts
of upholding the rights of the buyer.
This case has left an indelible mark in common law countries that stipulation as to time is a
fundamental breach. Two points should be noted from this case;
a. The concept of De minimis can still be considered important
b. Stipulation as to time is considered to be fundamental to the contract of sales of goods

18

Effect of rejection
s. 50 says when a buyer rejects goods, he is not bound to return them to the seller. His duty is
to inform the seller that he has rejected the goods and he is bound to put the goods at the
disposal of the seller to come and collect.
But where the buyer has paid the price of those goods or any part of the goods, he is entitle to
retain possession of the good or the part that he has paid for as security for the repayment of
the money.
s. 51 says the buyer cannot reject goods after he has accepted them. That is, you cannot
approbate and reprobate at the same time.
s. 52 says the buyer is deemed to have accepted goods in the following circumstances;
a. where the buyer informs the seller that he has accepted the goods
b. where the buyer does not inform the seller of acceptance within a reasonable time
after delivery of the goods. He is deemed to have accepted when the reasonable time
elapses after delivery.
c. where he wrongfully neglects or refuses to place the goods at the sellers disposal after
he has rejected them.
Personal rights of the buyer
s. 53 says where the seller does not deliver in accordance with the contract, or where the
buyer rejects a non-conforming delivery, he may sue the seller for damages. The damages
here are determined on the basis of the foreseeability test
s. 54 says the loss which could have been reasonably foreseen by the seller at the time the
contract was med which could have likely been resovelved at the time of the contract.
s. 55 deals with a breach of a fundamental obligation or a condition or warranty
s. 57 says where a buyer has paid the price of the goods in full or in part and the seller does
not deliver the goods or the seller recovers possession of goods delivered for any reason, the
buyer may sue to recover the money paid. The right to recover monies paid is in addition to
any other rights which the buyer may have.
Right of specific performance
s. 58 says in situations where the buyer does not consider the payment of damages to be
satisfactory and so he want the actual delivery of goods Dominis Fisheries v. Bremen
Vegesaker Fisheries (1973) 2 GLR 490. The plaintiff negotiated the sale of a shipping vessel
called Padeborn from the defendants. The defendants did not deliver the vessel but sold it to
the government of Ghana and plaintiff went to court and asked for specific performance. The
judge gave an order of specific performance for the defendant to deliver the ship to the
plaintiff.
29:10:14
Hire Purchase & Conditional Sales
Hire purchase was originally covered in Part VIII of the Sale of Goods Act which was
considered not belong to the sale of goods by the Law Reform Commission. Hire Purchase
Decree, 1974 (NRCD 292) replaced Part VIII of the Sale of Goods Act.
19

Hire purchase was originally dealt with in Part VIII of the Sale of Goods Act. But Part VIII
was replaced by the Hire Purchase Decree, 1974 (NRCD 292). Its now known as Hire
Purchase Act, 1974 (NRCD 292).
Under the common law, hire purchase was not the same as sale of goods. The leading case on
this distinction is Helby v. Matthews (1895) AC. It was about hiring of a piano by one party
to another. The hirer was to pay rent for the use of piano. The contract also included an option
to buy the piano. If he exercises that option, he will pay a fix price to make it a purchase. So
it was the hiring of a piano with an option to buy. Hirer pays rent for hiring. He only pays
purchase price when he exercises option to buy. The hirer sold the piano to another person
when he was not the owner or had purchased it. The owner of the piano sought to reclaim the
piano from the buyer. One issue was whether the hirer of the piano was an agent of the owner.
At the time, there was a legislation called the Factors Act. If he were an agent, he would be
covered by the Factors Act. Plaintiff was able to recover piano from defendant.
Conditional Sale
In contrast to a hire purchase, a onditional sale is contract of sale accompanied by a condition
Lee v. Butler (1893) 2 QB. It was about a contract for hire and purchase. The full price was to
be paid in three monthly instalments. But the seller was to maintain ownership of the
furniture until the payment of the whole three instalments. The court said this was not
actually a hire purchase agreement but a conditional sale. That because there was an
obligation to buy, that is, to complete payment of the agreed price. So the difference between
the two cases was the fact that in the first contract, there was an option to buy after the period
of hiring but in the second case, there was no such option; the buyer had a condition to buy,
excerpt that the price was to be paid over a three month period. In the first case, the hirer had
no obligation to buy but an option to buy.
The Sale of Goods Act treated both sale of goods and hire purchase in the same Act. But the
Law Reforms Commission treated them differently, hence the promulgation of the Hire
Purchase Decree. Interestingly, just about the same time that the legislation was going on for
the decree, there was a case going on Yayo v. Nyimase (1975) 1 GLR 422. It was a CA
decision decided in 1974. The CA was then the highest court of Ghana. The court, per
Hayfron-Benjamin J (as he then was) compared the common law definition of hire purchase
based on Helby v. Matthews and compared it with the definition of hire purchase in the Sale
of Goods Act. He was willing to depart with the Helby v. Matthews as he endorsed the
definition of hire purchase as a contract to buy. But the decree separated the two by taking out
Part VIII of the Sale of Goods Act. So while the Law Reforms Commission thought it was
wrong to combine hire purchase with the sale of goods, it also thought it was okay to consider
sale of goods as conditional sale.
s. 1 (1) of NRCD 291 establishes certain formalities that must be met in any hire purchase or
conditional sale agreement. It says the owner or seller of the goods that are the subject matter
of a hire purchase or conditional sales cannot enforce the agreement unless the following
formalities are met;
a) The agreement must be in writing
b) It must be signed by the parties (owner and the hirer of product) and by all other
parties to the agreement. References to all other parties recognises the fact that there
may be guarantors.

20

s. 1 (b) says it is not enforceable unless the requirements of ss. 2, 4 are complied with.
s. 2 says before the hire purchase or conditional sales agreement is made, the seller or owner
of product shall state orally and in writing to the prospective buyer or hirer the cash price of
the goods and the hire purchase price separately.
s. 3 says in addition to the statement of the cash price and the hire purchase price which is to
be given prior to the finalisation of that agreement, the agreement itself must contain a
statement of the cash price and the hire purchase price, thereby giving the total purchase price
that is to be paid by the hirer.
s. 3 (1) says the agreement must state the amount of each instalment paid and the due date for
payment. The agreement must include a description of the goods to which the agreement
relate, sufficient to identify those goods. The agreement must include a notice reflecting the
terms of the First or Second Schedule to the decree. That notice reflects the provisions in s. 4.
s. 4 says the hirer must be inform that he not to complete the transaction and that he has the
option to terminate the hiring of the product.
ss. 1, 2, 3, 4 embody the formality test that must be met before one can say there is a hire
purchase agreement, otherwise the seller or owner cannot enforce agreement.
s. 3 (2) says a copy of the agreement shall be delivered to the buyer or hirer within 14 days of
the agreement.
s. 3 (3) says a court may dispense with any of the requirements in s. 3 (1) or 3 (2) if that court
is of the view that the sellers failure to meet any of those requirements has not prejudiced the
buyer or hirer and if it will be just and equitable to dispense with that particular requirement.
NOTE: All these formalities were contained in the Sale of Goods Act; they were only
transferred from the Sale of Goods Act. The formalities referred to were all in s. 66 of the
Sale of Goods Act.
Enforceability & Non-enforceability
The question of enforceability of the agreement as a whole arose in Yayo v. Nyinase. It was
argued for the owner of the product (truck) that the agreement is not enforceable by anyone
(by either the buyer or owner) if any of the formalities had not been met. But that argument
was rejected by the CA by pointing out the fact that it is not to be enforced by the owner or
the seller. So the focus of the non-enforceability issue is on the owner or seller of the
agreement. But in addition to not being able to enforce an agreement, the owner or seller
cannot also enforce any contract of guarantee in the contract. Eg. if anyone signed as
guarantor, it cannot be enforced. Further, any security or collateral given by the hirer in
respect of any monetary consideration cannot also be enforced by the owner or seller. If any
of the formalities are not met, the seller or owner cannot recover the goods from the hirer. All
these provision are in s. 1 (2) of NRCD which is equivalent to s. 66 of Act 137.
Apart from the formalities and the non-enforceability, there are certain provisions included in
the agreement called Void Terms. These void terms are dealt with in s. 4.

21

s. 4 nullifies or excluded the following provisions in any hire purchase or conditional sales
agreement;
a) Any provision that allows the owner or seller of the goods or that allows any person
acting on behalf of the owner or seller to enter any private premises to take possession
of goods that are under hire purchase or conditional sale, or any provision that
excludes liability for such entry such a provision is void.
b) Any provision that restricts or excludes the rights of the hirer or buyer to terminate the
agreement or that imposes any liability for such termination, except where that
provision is consistent with s. 6 is also void.
c) Any provision that says that a person acting on behalf of the owner or seller is deemed
to be an agent of the hirer or buyer is a void.
d) Any provision that relieves the owner or seller from liability for the acts of any person
acting on his behalf is also void (this reinforces 4 (c))
NOTE: Note the formalities, the consequences of violations of formalities and the void terms.
But there is a provision that recognised the principle of freedom of contract. s. 23 of decree
allows the parties themselves to depart from any of the formalities. So s. 23 allows for the
variation of the formalities and the void terms and the courts will allow them. All these are in
Part I of the NRCD.
PARTt II
Termination and completion of the hire purchase agreement
s. 5 (1) gives the hirer or buyer the right to terminate a hire purchase or conditional sales
agreement at any time before final payment is due
s. 5 (2) says with respect to conditional sales, the buyer cannot exercise the right to terminate
the agreement where the property in the goods has become vested in the buyer under a
conditional sales agreement if he has transferred the goods to a third party.
s. 5 (3) further says that where a buyer terminates a conditional sales agreement after property
has passed to him but before final payment, the property (ownership) reverts to the previous
owner or to any person entitled to it through that owner.
s. 6 contains duties and liabilities of the hirer or buyer who terminates the agreement before
final payment.
s. 6 (1) says the hirer or buyer who terminates the hirer purchase or conditional sales
agreement before the final payment is due shall be liable to pay the arrears that accrues as at
the time of termination. In addition to any accrued liabilities, the buyer shall be liable to pay
the difference between the total of the sums paid under the agreement and one-half of the
purchase price.
s. 6 (2) says the hirer or buyer who terminates must return the goods to the owner or the seller
at his own expense.
s. 6 (3) says if he has failed to take reasonable care of the goods, he is also liable to
compensation the owner or seller for any loss caused by that failure.

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s. 6 (4) says if the hirer or buyer fails to return the goods, the owner or seller may sue to
recover possession of the goods and the court shall order such recovery without recognising
an option to pay for the goods on the part of the buyer of those goods.
s. 7 (1) says the buyer or hirer of the goods may complete the transaction earlier than the
stipulated date by notifying the owner or seller of the goods in writing.
s. 7 (2) says such early completion is done when the hirer or buyer pays the net balance
(balance due at the time of completion) of the purchase price.

Concept of Protected Goods

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