Topic: Sale of goods/hire purchase

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  • 7 Marks

BCL – May 2017 – L1 – Q7b – Sale of goods/hire purchase

Explain the transaction between K&K Company Limited and XBF Company Limited regarding goods delivered by sample.

b) Juba is a sales representative of K&K Company Limited. He visited the premises of XBF Company Limited. XBF Company Limited was interested in providing its core staff with protective clothing consisting of masks, gloves, and boots. After describing the types of protective clothing to the sales representative, Juba showed the XBF Company Limited samples of the masks, gloves, and the boots that his company intended to sell. The company accepted the samples. On the day of the delivery, the auditors of XBF found that the goods delivered did not match with the samples.

Required: Explain the transaction between K&K Company Limited and XBF Company Limited in terms of the provisions of the Sale of Goods Act, 1963 Act 137. (7 marks)

  • In a contract of 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. (3 marks)
  • In a contract of 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. (3 marks)
  • Thus, the goods delivered did not correspond to the description or the sample. (1 mark)

(Total: 7 marks)

  • 6 Marks

BCL – May 2017 – L1 – Q7a – Sale of goods/hire purchase

Differentiate between specific goods and unascertained goods in terms of definition.

a) What is the difference between ‘specific goods’ and ‘unascertained goods’ in terms of definition? (6 marks)

 

  • Specific Goods: Goods identified and agreed on before or at the time the contract of sale is made. This requires that the actual goods that the buyer is to receive under the contract can be identified at the time that the contract is agreed. Examples include goods bought at a supermarket picked from the shelf or a second-hand car chosen off a garage forecourt and sold by reference to its registration number.
  • Unascertained Goods: Goods which are not identified and agreed upon at the time the contract is made. These are goods that are yet to be manufactured or grown, or goods that are acquired after making the contract. Unascertained goods never become specific; they only become ascertained.

(3 marks for each definition = 6 marks)

  • 6 Marks

BCL – May 2017 – L1 – Q5c – Sale of goods/hire purchase

Distinguish between a contract for the sale of goods and an agreement to sell.

c) Distinguish between a contract for the sale of goods and an agreement to sell. (6 marks)

  • A contract for the sale of goods is where the seller transfers or agrees to transfer the property in goods to the buyer for a consideration. Here, the property in goods passes immediately upon the conclusion of the contract.
  • An agreement to sell is a situation where the parties agree that the property in the goods would be transferred to the buyer at a later date, subject to some condition that has to be fulfilled.
  • An agreement to sell becomes a sale upon the fulfillment of the condition subject to which property in the goods is to be transferred.

(3 points at 2 marks each = 6 marks)

  • 10 Marks

BCL – May 2017 – L1 – Q3b – Sale of goods/hire purchase

Explain the aspects of delivery of goods in a sale of goods contract, including the cost of delivery, means of delivery, and place of delivery.

b) Explain delivery of goods in relation to:

i) Cost of putting the goods into deliverable state. (2 marks)

ii) Means of delivery. (6 marks)

iii) Place of delivery. (2 marks)

 

i) The expenses of and incidental to putting the goods into a deliverable state are to be borne by the seller unless the contract for the sale states otherwise. (2 marks)

ii) Unless otherwise agreed, the seller may deliver the goods to the buyer by:

  • Transferring to the buyer the actual physical control over the goods; or
  • Transferring to the buyer the means of obtaining actual physical control of the goods; or
  • Transferring to the buyer documents of title to the goods;
  • Delivery of the goods to the authorized agent of the buyer is a delivery to the buyer unless otherwise intended.
  • Delivery is also occasioned when the contract specifies a delivery of the goods to be given to a carrier to be delivered to the buyer.
  • Where the goods are to be delivered to a third party on behalf of the buyer and the third party acknowledges possession of the goods.

(6 marks)

iii) Place of delivery is the seller’s place of business if there is one, or place of residence unless the contract specifies the intention to deliver at a particular place. (2 marks)

  • 20 Marks

BCL – May 2016 – L1 – Q4 – Sale of Goods/Hire Purchase

Analyze the implications of paying 60% of a hire purchase price, the legality of seizing a motor, and possible remedies.

Kobi Jones, a porter, buys a tricycle motor to help him cart goods of his clients. The motor was purchased from Agaza Motor Company Limited on a hire purchase agreement. The hire purchase price was GH¢4,500.00 to be paid for in twenty equal instalments. By June 2011, Kobi Jones had paid 60% of the purchase price but was unable to pay the instalment due in July 2011. His plea to be given more time to pay fell on deaf ears. In August 2011, while Kobi Jones was on his way to cart goods for customers, the agents of Agaza Motor Company seized the motor. Kobi Jones thus lost a very lucrative job from which he had hoped to make GH¢2,400.00. Kobi Jones is very upset and comes to you for advice.

a) Explain the effect that the payment of 60% of the purchase price had on the agreement. (6 marks)

b) What does the seizure of the motor by the agents of Agaza Motor Company amount to? (10 marks)

c) What remedies, if any, are available to Kobi Jones? (4 marks)

a)

  • The item (tricycle motor) becomes a protected item. (4 marks)
  • The item can be recovered only by a court order.         (4 marks)

b)

  • The seizure of the item breaches the hire-purchase agreement entered into between Kobi Jones and Agaza Motor Company Limited. (8 marks)

c)

  • Kobi Jones can go to court for an order to reclaim his motorbike. (4 marks)
  • 10 Marks

BCL – May 2016 – L1 – Q3a – Sale of Goods/Hire Purchase

Identify remedies available to a buyer when goods are over-delivered, under-delivered, or delivered in a mixed lot.

What remedies are available to a buyer when goods are:
i) Over-delivered (3 marks)
ii) Under-delivered (3 marks)
iii) Delivered in a mixed lot (4 marks)

i) Over-delivered:

  • The buyer may not reject all the goods just because there is an excess in quantity.
  • The buyer may accept all the goods delivered and pay for the extra goods at the contract rate.
  • The buyer may accept the goods that should have been delivered and reject the remainder and then recover damages from the seller representing the cost of separating the goods that should have been delivered from the remainder.
    (3 points at 1 mark each for a total of 3 marks)

ii) Under-delivered:

  • The buyer may reject the goods.
  • If the buyer accepts the goods, they must pay for the goods at the contract rate.
    (2 points at 1.5 marks each for a total of 3 marks)

iii) Delivered in a mixed lot:

  • The buyer may accept all the goods delivered and pay a reasonable price for the extra goods.
  • The buyer may accept the goods included in the contract and reject the remainder and recover damages involving the cost of separating the remainder and for any deficiency in the goods delivered.
    (2 points at 2 marks each for a total of 4 marks)
  • 5 Marks

BCL – May 2016 – L1 – Q2a – Sale of Goods/Hire Purchase

Identify five ways in which property in goods passes from a seller to a buyer.

Identify FIVE ways in which property in goods passes from a seller to a buyer. (5 marks)

  • In a contract for the sale of unascertained goods, property passes when the goods are ascertained.
  • Property in goods passes when the parties intend it to pass.
  • Property in goods passes when the goods are delivered to the buyer.
  • Where goods are delivered to the buyer on approval, or on sale or return or other similar terms, the property in the goods passes to the buyer when he signifies his approval or acceptance to the seller, or any other act adopting the transaction.
  • When the buyer keeps goods sold on approval, or on sale or other similar terms, the property in it then passes when the buyer retains the goods without giving notice of rejection.
  • If a time has been fixed for the return of the goods, on the expiration of such time, or after a reasonable time, property passes.

[Any 5 points at 1 mark each for a total of 5 marks]

  • 6 Marks

BCL – Nov 2016 – L1 – Q2c – Sale of Goods/Hire Purchase

Determine if Tracy Achiaa has legal grounds to recover the impounded vehicle.

Orlando Motors, an American Automobile Company, paid for three (3) cars and consigned them to Mr. Kobby Ayensu in Ghana by a bill of lading; vehicle No. GTB 7084 was one of the three (3) cars. Mr. Kobby Ayensu, as the consignee, took delivery of the vehicles and registered vehicle No. GTB 7084. He later sold the vehicle he registered to Tracy Achiaa. The appropriate change of ownership was then effected. Later, one Mr. Oko Lartey who was claiming interest in the cars, sued Mr. Kobby Ayensu in respect of the cars and immediately went to court and obtained an order resulting in the impounding of the vehicle from Tracy Achiaa.

Required:
Explain whether there is any legal basis for Tracy Achiaa to take action to recover the impounded vehicle.

There is a legal basis for Tracy Achiaa to take action to recover the impounded vehicle:

  • Tracy Achiaa was a bona fide purchaser for value without notice under the provisions of the Sale of Goods Act, 1962 (Act 137), and, therefore, had a legal interest in the vehicle. By the provisions of Section 26 of Act 137, property in the vehicle had passed to her.
  • Even if under an agreement between Mr. Oko and Mr. Kobby Ayensu, Mr. Ayensu could be regarded as a mere agent of Mr. Oko, and as a mercantile agent in possession, Mr. Ayensu could, under Section 30 of Act 137, validly dispose of the vehicle to Tracy Achiaa.
  • The vehicle was shipped to Mr. Kobby Ayensu by Orlando Motors Ltd. as consignor, and Mr. Kobby Ayensu as consignee. By the bill of lading, Mr. Kobby Ayensu was the owner of the vehicle, as proclaimed to the whole world, and therefore, Tracy Achiaa validly acquired the vehicle from Mr. Ayensu under a contract of sale, which passed on valid title in the vehicle to her. Tracy Achiaa is, therefore, protected, on the face of it all, by Act 137.
    (3 points at 2 marks each = 6 marks)
  • 8 Marks

BCL – Nov 2016 – L1 – Q2b – Sale of Goods/Hire Purchase

Identify differences between Free On Board (FOB) and Cost, Insurance, and Freight (CIF) contracts.

Identify FOUR differences each between Free On Board (FOB) contracts and Cost, Insurance, Freight (CIF) contracts.

Free On Board (FOB) Contracts

  • The buyer is entitled and bound to nominate a ship to the seller calling during the agreed period.
  • The seller is bound at his own expense, to have the goods on the ship nominated by the buyer.
  • The seller is bound at his own expense, to give such notice to the buyer.
  • The seller is not bound to effect any insurance on the goods.
  • The seller is bound to transmit to the buyer bills of lading by which the goods are deliverable to the buyer.
  • The risk of the goods passes to the buyer when they are shipped.
    (4 points at 1 mark each = 4 marks)

Cost, Insurance, and Freight (CIF) Contracts

  • The seller is bound at his own expense to ship the goods during the period, if any, to the port agreed upon or to acquire goods afloat which have been so shipped.
  • The seller is bound, at his own expense, to effect on the goods an insurance of the type normal for goods and voyage of the kind in question.
  • The seller is bound to transfer to the buyer proper shipping documents in accordance with the terms of the contract.
  • The buyer is bound to take up proper shipping documents and, on doing so, to pay the price in accordance with the terms of the contract.
  • The goods are deemed to be delivered to the buyer, and the property therein accordingly passes to the buyers, on the transfer to him of the bills of lading.
  • The risk in the goods passes to the buyer when they are shipped or acquired afloat.
    (4 points at 1 mark each = 4 marks)
  • 6 Marks

BCL – Nov 2016 – L1 – Q2a – Sale of Goods/Hire Purchase

Explain the relationship between the parties under the Sale of Goods Act.

Mr. Bossman bought a Nissan diesel vehicle from Trans Africa Engineering and Motor Co. Ltd. However, when the vehicle broke down, Mr. Bossman did not go to the dealers for spare parts, but rather went to Messrs Jones Williams & Co., and through one of its directors, placed an order for the spare parts from Japan. The order was placed for the spare parts with TSS Co. Ltd, and by Telex, headed “we quote for Japan,” TSS Co Ltd, supplied Jones Williams & Co. with the requisite quotation, and that the spare parts would be delivered in three (3) months’ time. Mr. Bossman then got his foreign bankers to transfer the amount, being the cost of the spare parts to the bankers of Messrs Jones Williams & Co. Ltd, who in turn, paid the amount to the suppliers. When the spare parts were not forthcoming, Mr. Bossman sued Messrs Jones Williams & Co. for the return of his money, interest, and damages. Before the court case started, Mr. Bossman received the spare parts, and therefore had to abandon his claims.

Required:
a) Explain the following in terms of the provisions of the Sale of Goods Act, 1962 (Act 137):
i) The relationship between Mr. Bossman and Messrs Jones Williams & Co. Ltd.
ii) The relationship between TSS Co. Ltd and Messrs Jones Williams & Co. Ltd.

i) The relationship between Mr. Bossman and Messrs Jones Williams & Co. Ltd:

  • The relationship is one of agency and not of sale of goods.
  • Messrs Jones Williams & Co. Ltd never delivered to Mr. Bossman a pro-forma invoice of its own stating the price at which it would sell the spare parts to Mr. Bossman or the time it would deliver the goods.
  • All that Messrs Jones Williams & Co., Ltd did was to give Mr. Bossman a copy of the telex from the suppliers and asked him to pay for the cost of the spare parts calculated from the unit prices.
  • The obligation that Messrs Jones Williams & Co Ltd assumed towards Mr. Bossman was that of using its best endeavors to procure the goods for him on the most favorable terms, and they were not responsible for the delay.
    (3 marks)

ii) The relationship between TSS Co. Ltd and Messrs Jones Williams & Co. Ltd:

  • When the TSS Co. Ltd agreed to procure the goods for Messrs Jones Williams & Co. Ltd, TSS Co. Ltd did that as the agent of Messrs Jones Williams & Co. Ltd, or as a principal party standing towards Messrs Jones Williams & Co. Ltd in the relationship of a seller.
  • The contract between the supplier TSS Co. Ltd and Jones Williams & Co. Ltd was of the type in commercial circles known as Free on Board (FOB) contract. By the rules of FOB Contracts, the supplier assumed the responsibility for shipping the goods to the buyer.
  • The seller TSS Co. Ltd assumed no responsibility for insurance or freight, nor did it give guarantees as to the time of the arrival of the ship at its destination.
  • The only representation which TSS Co. Ltd made was that it was ready, willing, and able to deliver the goods (spare parts) within three (3) months to any port in Japan nominated by Jones Williams & Co. Ltd and load them at their own expense on the ship designated by them (Messrs Jones Williams & Co. Ltd).
    (3 marks)

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