Sale of Goods

• Pages: 97-128

CHAPTER 7

SALE OF GOODS

RIGHTS AND OBLIGATIONS

Introduction – the sale of goods legislation

In the Commonwealth Caribbean, the law relating to contracts for the sale of goods is

derived from both common law and statutory sources. The body of case law governing

contracts for the sale of goods grew up out of a willingness of courts to mitigate the

harshness of the early common law ‘ caveat emptor ’ rule, according to which a buyer in

a transaction is responsible for examining the goods to be purchased, so that, in the

absence of an express warranty (on which he could insist to protect himself), he could

not bring an action against the seller if the item failed to meet his expectations.

Over time, this rule was modifi ed and supplemented by case law in which the

courts recognised that, in certain circumstances, the parties must implicitly have

intended certain terms to apply: for instance, terms in a bulk order that the goods

would correspond with a sample provided by the seller,

1 and that the seller would

transfer good title in the property.

As discussed in Chapter 6, contractual terms can be implied into contracts by

legislation, notwithstanding they were not contemplated or expressly incorporated

into the contract by the parties. Under the sale of goods legislation, terms are implied

into contracts for the sale of goods, unless they are expressly excluded.

2

Many Commonwealth Caribbean territories have passed legislation regulating

contracts for the sale of goods in relation to various matters including formation,

capacity to contract, terms, and remedies available to the parties in such contracts.

3

Sale of goods legislation has only partially codifi ed, and has not replaced, the

common law principles governing these types of contracts.

By way of example, the Sale of Goods Act of Trinidad and Tobago states as follows:

59. (1) The rules in bankruptcy relating to contracts of sale shall continue to apply

thereto notwithstanding anything contained in this Act.

(2) The rules of the Common Law, including the law merchant, save in so far as they

are inconsistent with the express provisions of this Act, and in particular the rules

relating to the law of principal and agent, and the effect of fraud, misrepresenta-

tion, duress or coercion, mistake or other invalidating cause, shall continue to

apply to contracts for the sale of goods.

(3) Nothing in this Act shall affect the written laws relating to bills of sale or any

other written law relating to the sale of goods.

1 Parker v Palmer (1821) 4 B & Ald 387; Lorymer v Smith (1822) 1 B & C 1. See s 16 and s 13, Sale of

Goods Act, Cap 318 (Barbados).

2 Section 54 and s 15(d), Sale of Goods Act, Cap 318 (Barbados); s 55, Sale of Goods Act; Cap 393

(Antigua and Barbuda); and s 64, Sale of Goods Act 1978 (Bermuda).

3 See, for example, Sale of Goods Act, Cap 318 (Barbados); Sale of Goods Act, Cap 393 (Antigua and

Barbuda); Sale of Goods Act 1978 (Bermuda); Sale of Goods Act, Cap 261 (Belize); Sale of Goods

Act, Ch 337 (The Bahamas); Sale of Goods Act (Jamaica); and Sale of Goods Act, Ch 82:30 (Trinidad

and Tobago).

98 Commonwealth Caribbean Contract Law

(4) The provisions of this Act relating to contracts of sale do not apply to any trans-

action in the form of a contract of sale which is intended to operate by way of

mortgage, pledge, charge or other security.

4

Similar savings clauses are contained in the legislation of other Commonwealth

Caribbean countries.

5

The sale of goods legislation enacted in the various jurisdictions of the

Commonwealth Caribbean is based closely on the UK Sale of Goods Acts of 1893

and 1979. To the extent that the Caribbean legislation is ambiguous or silent, judicial

decisions relating to the UK legislation are useful supplements to local case law in

interpreting the Caribbean statutes. This process of interpretation must, however, be

informed by an examination of the intention of the parties, so that the legislation is

not interpreted so strictly as to produce a result that the parties could not reasonably

have intended.

Types of goods covered

Sale of goods legislation applies to contracts for the sale of goods, whether absolute or

conditional.

6 Contracts for the sale of goods are defi ned as contracts whereby the seller

transfers or agrees to transfer the property in goods for consideration (that is, for a

price). This defi nition includes contracts of sale between one part owner and another.

7

Goods are defi ned as all chattels personal other than choses in action and money, and

can include ships,

8 building materials,

9 cars, 10 cattle 11 and alcoholic beverages.

12

Contracts for the sale of goods are classifi ed as ‘agreements to sell’ where transfer

of the property is to take place at a future time. Agreements to sell become ‘sales’

when the relevant time elapses or the conditions in the contract for the transfer of

property are fulfi lled.

A contract for the sale of goods is called ‘a sale’ where the transfer takes place at

the time when the contract is made.

4 See s 59, Sale of Goods Act, Ch 82:30 (Trinidad and Tobago); s 62, Sale of Goods Act 1978 (Bermuda);

and s 59, Sale of Goods Act (Jamaica).

5 For example, see s 59, Sale of Goods Act, Cap 318 (Barbados); s 59, Sale of Goods Act, Cap 393

(Antigua and Barbuda); s 70, Sale of Goods Act 1978 (Bermuda); s 61, Sale of Goods Act, Cap 261

(Belize); s 59, Sale of Goods Act, Ch 337 (The Bahamas); and s 59, Sale of Goods Act (Jamaica).

6 See s 2, Sale of Goods Act, Cap 318 (Barbados); s 3, Sale of Goods Act, Cap 393 (Antigua and

Barbuda); and s 3, Sale of Goods Act, Ch 82:30 (Trinidad and Tobago).

7 See s 3, Sale of Goods Act, Cap 318 (Barbados); s 3 Sale of Goods Act, Cap 393 (Antigua and

Barbuda); and s 2, Sale of Goods Act 1978 (Bermuda).

8 See the Bahamian case of Canadian Imperial Bank of Commerce v Owners of and all parties interested in

the motor vessel ‘New Light’ (1997) Supreme Court, The Bahamas, No 1217 of 1994, unreported

[Carilaw BS 1997 SC 87]. See also Behnke v Bede Shipping Company Limited [1927] 1 KB 649; Re Blythe

Shipbuilding and Dry Docks Co [1926] Ch 494.

9 Baksh Trading as Rassul Baksh Sawmill and Hardware v Emile Ellias and Company Ltd (1994) High

Court, Trinidad and Tobago, No 950 of 1990, unreported [Carilaw TT 1994 HC 115].

10 Mitchell v Petroleum Products Ltd (1988) Supreme Court, The Bahamas, No 321, unreported [Carilaw

BS 1988 SC 48].

1 1 Sanchez v Quesnel (1990) Court of Appeal, Trinidad and Tobago, No 49 of 1986, unreported [Carilaw

TT 1991 CA 24].

12 Panday v Baksh (1981) High Court, Guyana, No 2139 of 1976, unreported [Carilaw GY 1981 HC 42].

Chapter 7: Sale of Goods 99

The terms of the Sale of Goods Acts apply by analogy to contracts for work and

materials. Thus, in Samuels v Davis, 13 the plaintiff, a dentist, contracted with the

defendant to make a set of dentures for the defendant’s wife. He made and delivered

the dentures, but the defendant refused to pay for them on the ground that they

were unusable. It was held that a term could be implied into the contract that the

dentures were to be fi t for their purpose, arising either (1) under the sale of goods

legislation itself, or (2) by analogy with the legislation.

Subject matter of the contract

The Acts apply to contracts for the sale of goods, which may be existing goods

already owned by the seller, or future goods, which are goods to be acquired or

manufactured by the seller after the contract has been made.

14

If, in the case of a contract for specifi c goods (that is, goods which are identifi ed

when the contract is made), those goods have been destroyed at the time the contract

is made without the knowledge of the seller, then the contract is void.

15

Further, if the goods perish before the risk passes to the buyer under the contract

without any fault of either party, then the contract will be void.

The risk prima facie passes with the property. So, generally, the risk will pass to

the buyer when the property is delivered to the buyer. This means that before the

sale but after the agreement to sell, the risk remains with the seller.

16

It should be noted that the parties are free to determine the time at which the

property passes or the risk passes to the buyer and, in the case of such determina-

tions, the rule that the risk passes with the property will not apply.

17

Capacity to contract

The ability of minors, drunken persons and the mentally ill to enter into contractual

(or quasi- contractual) obligations is governed by the substantial body of common

law rules concerning the capacity to contract. The general rule is that such persons

cannot enter into contracts, with the exception of contracts for necessaries. Capacity

to contract is discussed in detail in Chapter 5.

Sale of goods legislation expressly preserves the body of law relating to capacity.

For example, section 4 of the Sale of Goods Act (Trinidad and Tobago) provides:

4. Capacity to buy and sell is regulated by the general law concerning capacity to

contract, and to transfer and acquire property. However, where necessaries are sold

13 [1943] KB 526; Young & Marten Ltd v McManus Childs Ltd [1969] 1 AC 454 and Gloucestershire County

Council v Richardson [1969] 1 AC 480.

14 Section 6, Sale of Goods Act, Cap 318 (Barbados); s 7, Sale of Goods Act, Ch 82:30 (Trinidad and

Tobago); and s 6, Sale of Goods Act (Jamaica).

15 Section 7, Sale of Goods Act, Cap 318 (Barbados); s 8, Sale of Goods Act, Ch 82:30 (Trinidad and

Tobago); and s 7, Sale of Goods Act (Jamaica).

16 Section 8, Sale of Goods Act, Cap 318 (Barbados); s 9, Sale of Goods Act, Cap 303 (Antigua and

Barbuda); and s 8, Sale of Goods Act (Jamaica).

17 Section 21, Sale of Goods Act, Cap 318 (Barbados); s 19, Sale of Goods Act, Cap 393 (Antigua and

Barbuda); and s 18, Sale of Goods Act (Jamaica).