SALE OF GOODS ACT

Contracts for sale of goods are the most common type of contract. The purpose of the Sale of
Goods Act was to codify the vast amount of case law that had been generated in this area.
Freedom of contract is preserved since the parties may come to their own terms. However, the
Act sets out the terms that will be implied in a contract of sale in the absence of an express
agreement to the contrary. In other words, the Act provides a set of default rules.

Application of the Sale of Goods Act The Act applies only to a sale of goods for money

What is NOT Covered

What is Covered; Sale; A transfer of ownership of goods as soon as a contract is created (sale)
or sometime thereafter (agreement to sell)

What is NOT Covered; Leases, gifts, security for loans, consignments

What is Covered; Goods; Tangible (physical) things that can be moved, e.g., cars, books, crops

What is NOT Covered ;Land and anything attached to it; intangible items such as trademarks
or shares; services Money Cash, cheques, credit cards, debit cards, money and goods Trade of
goods When goods are sold together with services, the courts will determine whether the
essence of the contract was the performance of a service or a transfer of goods.

 Passing of Property

An important implied term is the passing of property.

Property passes when the ownership or title in goods is transferred from the buyer to the seller.

These rules are important for three reasons

: 1. They affect remedies available for breach;

2. The buyer may have to prove that he or she owns the goods in the event that the seller goes
bankrupt; and

3. risk for loss or damage to the goods passes with the property unless the parties agree
otherwise. Difficulties arise when the seller of the goods still has possession or physical control
of the goods. The Act provides rules for determining when property passes under five
situations,

1. Rules on Passing of Property Rule:

Unconditional contract for sale of specific goods in deliverable state

The contract is made, irrespective of when delivery or payment takes place.

2 Rules on Passing of Property Rule:

. Contract for sale of specific goods where seller has to do something to put goods into
deliverable state

Ownership Passes to Buyer When:

Such thing is done, and buyer receives notice.

3. Rules on Passing of Property Rule:

Contract for sale of specific goods in deliverable state where seller has to weigh, measure, test,
or do something else to ascertain price

Ownership Passes to Buyer When:

Such thing is done, and buyer receives notice.

4. Rules on Passing of Property Rule:

Contract where goods are delivered to buyer on approval

Ownership Passes to Buyer When:

Buyer gives approval or acceptance. If buyer does not give approval or acceptance but retains
goods without notice of rejection, ownership passes when the time fixed for return of goods
expires or, if no time was fixed, on expiration of a reasonable time.

5. Rules on Passing of Property Rule:

Contract for sale of unascertained or future goods by description

Ownership Passes to Buyer When:

Goods of that description in deliverable state are unconditionally appropriated to the contract,
either by seller with assent of buyer or by buyer with assent of seller.

Implied Contractual Obligations of the Seller The Act distinguishes between conditions, or
essential terms, and warranties, or minor terms. Breach of a condition allows the injured party
to repudiate the contract and obtain release from any further obligations under it. Breach of a
warranty allows only the possibility of recovering damages.

The Act implies three types of terms: those regarding:

1. The seller’s title,

2. The nature of the goods, and

3. Delivery and payment. •

Seller’s Title

1. The seller has the right to sell the goods.

2. The buyer will enjoy quiet possession of the goods.

3. The goods will be free from unknown liens and encumbrances to any third party.

Nature of Goods

1. Goods sold by description will conform to that description.

2. Goods sold by sample will correspond with the sample in type and quality.

3. Goods will be of merchantable quality, that is, a reasonable person would buy them without
a reduction in price despite knowing of their imperfections. This applies only if the seller
normally deals with those sorts of goods. If the buyer has examined the goods, it does not cover
defects that he or she should have noticed.

4. Goods must be fit for their intended use. This applies when the seller normally deals with
those sorts of goods. When the buyer makes known to the seller the particular purpose for
which the goods are required and relies on the seller’s skill or judgment, the goods will be
suitable for that purpose. This does not apply when the buyer requests a product by its patent
or trade name.

When it comes to quality and fitness for use, the buyer is, to a certain extent, subject to caveat
emptor (“let the buyer beware”). If he or she has had an opportunity to examine the goods, it
is assumed that the buyer can and should determine the quality and fitness for his or her purpose

• Delivery and Payment

1. Delivery and payment should occur concurrently.

2. Time of delivery is a condition, but payment is a warranty. Hence, while the buyer may be
entitled to discharge the contract if delivery is late, the seller will be entitled to sue for damages
only if payment does not occur promptly.

3. Delivery normally occurs at the seller’s place of business.

4. The goods delivered will conform to the contract. Contracts may contain clauses that exempt
the seller from certain implied terms. However, such clauses are strictly interpreted against
sellers and cannot be used to such an extent that the seller can default without penalty or harm.
LAW OF AGENCY

What is Agency?

Agency “is a relationship that exists when one party represents another party in the formation
of legal relations.” The agent is the “person who is authorized to act on behalf of another” and
the principal is the “person who has permitted another to act on his behalf.” Agents are often
given authority to bind principals in contractual relationships.

Creation of an Agency Relationship Agency relationships arise in one of three ways:

1. Express authority (agency by express agreement) – An oral or written contract appoints the
agent and gives her specific authority to act on behalf of the principal.

2. Apparent authority (agency by conduct; agency by estoppel) – No agreement exists, but the
actions or statements of the principal give a third party a reasonable impression that the agent
has authority to act on behalf of principal.

3. Ratification – There is no express or apparent authority, but a principal accepts a contract

that was negotiated on his behalf without his authority. The requirements for ratification.

Ratification of an Agency Relationship Requirements:

1. Acceptance by the principal must be clear (may be written, oral, or implied by the principal’s
behavior).

2. Ratification must occur within a reasonable time after creation of the contract; what is
reasonable depends on the facts.

3. The principal must accept the whole agreement. If not, a new agreement is formed between
the principal and the third party directly

. 4. The principal must have been identified by the agent at the time of negotiation

. 5. The principal has the legal capacity to enter into the contract both at the time of negotiation
and ratification.

The Scope of an Agent’s Authority

• Actual Authority A principal is bound by any actions that are within the agent’s actual
authority. In this context, actual authority refers to authority that was:
1. Expressly given (orally or in writing); or

2. Could be implied by the principal’s conduct (e.g., principal pays for the goods); or

3. Could be implied based on the usual authority given to a person appointed to that position
(e.g., corporate secretary) (also referred to as commercial usage).

The principal is bound whether or not the third party is aware of the exact scope of the agent’s
actual authority.

• Apparent Authority Apparent authority is authority that a third party is entitled to assume the
agent possesses, based on either usual authority or the conduct of the principal. The term
holding out is used to refer to conduct where a principal represents someone to be its agent. A
principal is bound by contracts within the agent’s apparent authority only if the third party
relied on the appearance of that authority. A third party will not be able to enforce a contract if
it knew, or should have known, that the agent did not have authority to bind the principal.

• Ratification Finally, a principal will be held liable if it ratifies (subsequently adopts, based on
words or actions) a contract that was made by an agent without authority. In effect, the principal
establishes the contract retroactively, thus placing the principal, agent, and third party in the
same position as they would have been in if the agency relationship had existed at the time of
the contract.

When is the Agent Liable? An agent can be held liable when she is acting on behalf of an
undisclosed principal. As long as the agent had authority to act on behalf of the principal, the
third party can hold either the agent or the principal liable if the third party later discovers the
person it dealt with was only an agent. As well, an agent can be held liable when he indicates
that he is authorized to act for a principal but is in fact not authorized—regardless of whether
or not the agent is honestly mistaken. This would be considered a breach of warranty of
authority.

Responsibilities of Agent to Principal

The four main duties an agent owes to his or her principal.

Responsibilities of Agent to Principal

1. Duty to comply with the agency agreement The agent has to comply with the express and
implied terms (based on custom) of the agency agreement.
2. Personal performance In general, because a principal places a high degree of trust in the
judgment and skill of an agent, the latter cannot delegate his or her duties without the
principal’s consent. When a business is appointed an agent, responsibility may, of necessity,
be delegated to others in the organization.

3. Fiduciary duty (“fiduciary” comes from Latin, meaning “holding in trust”) From a legal
standpoint, this is one of the strictest standards of care imposed on relationships.

The agent has to act in good faith and in the best interests of the principal. It requires that the
agent:

1. Avoid conflicts of interest, where personal interests conflict with the best interests of the
principal.

2. Disclose anything that may be relevant to the principal’s interests.

3. Not personally profit from information or opportunities as a result of the agency relationship.

4. Not compete with the principal. A fiduciary duty may be displaced by the agent’s specific
instructions

. 4. Duty of care The agent is required to take reasonable care in the performance of its
responsibilities. The skill demanded depends on the agent’s task and competence.

Responsibilities of Principal to Agent The principal is required to:

1. Pay reasonable remuneration (unless the parties expressly agreed otherwise).

2. Indemnify the agent from expenses reasonably incurred in connection with relationship.

Termination of Agency Relationship Termination of an agency relationship may occur in a

number of ways:-

1. At the end of a time, event, or project specified in the agency agreement;

2. On notice by either party; or

3. By circumstances; for example, it becomes impossible for the agent to perform tasks, the
principal or the agent dies or becomes insane, or the principal becomes bankrupt.
LAW OF TORT

The word tort originates from the French language. It is equivalent to the English word “wrong”
and Romanian law’s term “delict”. It is derived from the Medieval Latin word “tortum” which
means “wrong” or “injury” which itself was further developed from the Old Latin word
“torquere” which means “to twist”. It is a breach of duty which amounts to a civil wrong.

A tort is defined as “a wrongful act or an infringement of a right (other than under contract)
leading to civil legal liability.” A tort occurs when a person wrongs someone else in a way that
exposes the offender to legal liability. This harm doesn’t always occur because someone
intentionally sets out to harm another person on purpose. Rather, a person can commit a tort
by acting negligently or failing to act appropriately. In addition, in some types of tort cases, an
actor is strictly liable for the damages they cause even when they are as careful as possible.

Tort law determines whether a person should be held legally accountable for an injury against
another, as well as what type of compensation the injured party is entitled to.

In tort lawsuits, the injured party—referred to as the “plaintiff” in civil cases (comparable to
the prosecutor in a criminal case)—seeks compensation, typically through the representation
of a personal injury attorney, from the “defendant” for damages incurred (i.e. harm to property,
health, or well-being).

Other definitions by various thinkers

According to John Salmond, He addresses tort as being only a civil wrong which has
unliquidated damages (those damages for which there is no fixed amount) in the form of
remedy and which is not just exclusively the breach of contract or the breach of trust or breach
of merely fair and impartial obligation.

According to Richard Dien Winfield, Tortious liability emerges from the breach of a duty
primarily fixed by the law, this duty is towards the other people generally and its breach is
redressible by an action for unliquidated damages.

According to Fraser, A tort is an infringement of a right in rent of a private individual giving a

right of compensation at the suit of the injured party.
Objectives of a tort

1. To determine rights between the parties to a dispute.

2. To prevent the continuation or repetition of harm i.e. by giving orders of injunction.

3. To protect certain rights of every individual recognized by law i.e. a person’s

reputation.

4. To restore one’s property to its rightful owner i.e. where the property is wrongfully
taken away from its rightful owner.

Essential Elements of a tort

There are 4 elements to every successful tort case are:

 The presence of a duty. We all have a duty to take steps to prevent injury from occurring
to other people.

 The breach of a duty. The defendant must have failed to live up to his duty to prevent
injury from occurring to you.

 An injury. You were injured.

 The injury resulted from the breach. The defendant’s actions led to your injury.
ASSIGNMENT.

IN GROUPS OF FIVE.

QUESTION ONE.

DISCUSS FIVE EXTERNAL FACTORS THAT MAY AFFECT LAW. (15 MKS).

INDIVIDUAL.

QUESTION ONE.

ASSESS FIVE TYPES OF INTELLECTUAL PROPERTY. (15MKS).

ALL THE BEST.