Commercial Law I

Notes on Commercial Law
COMMERCIAL LAW 1
NATURE AND DEFINITION OF A CONTRACT OF SALE OF GOODS
Sale of goods in Nigeria is regulated by the Sale of Goods Act 1893 (hereinafter called
SOGA), one of the few statutes of general application still in force in Nigeria. It is mainly
applicable in the states that made up the former Eastern and Northern regions in Nigeria
while the Sale of Goods Law applies in the states that made up the former Western
region.
The law on sale of goods exists as a bulwark for the risk ridden sea of commercial
transactions. Its major end is to ensure that parties to a contract of sale of goods do
not suffer unnecessary loss or hardship and that the commerce they engage has a good
environment to thrive. It is to this end that the Sale of Goods Act and Law provide for
a number of rules that govern the relationship of buyer and seller. Though, it must be
noted that, for the large part, the intention of the parties and the express terms of
their contract will still have precedence. See S. 55 SOGA.
DEFINITION
A contract of sale of goods is defined under S. 1(1) SOGA as: “a contract whereby the
seller transfers or agrees to transfer the property in goods to the buyer for a money
consideration called the price.”
It is clear from this definition that the SOGA admits of an outright sale and an
agreement to sell. In an outright sale, property in the goods passes to the buyer
immediately while in an agreement to sell, property only passes at a future date. See S.
1(3) SOGA. On when property would pass in an agreement to sell, S. 1(4) SOGA is to the
effect that: “an agreement to sell becomes a sale when the time elapses or the conditions
are fulfilled subject to which the property in the goods is to be transferred.” The
rationale in this distinction lies in the quality of rights and remedies available to the
parties in case of default by either. In an outright sale, the buyer can exercise
proprietary rights over the property in case of default by the seller e.g. detinue or
conversion. The seller on the other hand can sue for the price. Risk in the goods also
passes to the buyer at this stage. In an agreement to sell however, the buyer is only
entitled to an action for damages or specific performance if the seller defaults and this
is the same for the seller as against the buyer.
Another characteristic of the contract of sale of goods is that it can involve an absolute
or conditional sale. See ODUNFUNADE V ANTHONY (1962) NNLR 98 and S. 1(2) SOGA.
It is absolute when it requires nothing more than the exchange of goods and money for
the contract to crystallize. However, where something more is required for the contract
to take effect, the sale is conditional. This condition may be precedent, subsequent or
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inherent.
FORMATION OF A CONTRACT OF SALE

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The contract of sale of goods is just a special type of contract and as such, the general
principles of contract would still apply to a great extent. The rules as to offer,
acceptance, and capacity are basically the same, except as it concerns consideration
which is the price and the subject of the contract which is goods.
Generally, there is no strict formality for the creation of a contract of sale of goods. S.
3 SOGA provides that a contract of sale can be written or oral or partly so, express or
implied from the conduct of the parties, subject to the provisions of the Act or any
statute. Companies, as per the proviso, are however expected to affix their seal to
contracts which would ordinarily be made in writing by individuals. See S. 71 Companies
and Allied Matters Act. Also, any contract of sale made with an illiterate must bear a
jurat. See SS. 1 & 2 Illiterates Protection Act.
The under listed can be termed essentials in a contract of sale in the sense that their
absence would either render the contract void or inoperable against a party.
1. Offer and Acceptance: The general rules of contract would apply fully here with
the qualification that an invitation to treat may also be a proper offer under the
law of sale of goods. For instance, where goods are displayed in a market overt,
they would ordinarily be an invitation to treat. However, where the buyer picks
one item and drops the money for it at the stall, regardless of whether the seller
is present or not, the display of the goods would be a valid offer and a contract
would crystallize.
2. Parties: There would ordinarily be two parties to the contract of sale viz. a buyer
and a seller. It does not matter how many persons are on both sides.
3. Capacity: This is essentially the same as that covered under the general law of
contract. See S. 2 SOGA. Thus, infants, lunatics and drunk persons would
ordinarily be incapable except in certain instances. However, the proviso to that
section is to the effect that: “where necessaries are sold and delivered to an
infant, or a minor, or to a person, who by reason of mental incapacity or
drunkenness is incompetent to contract, he must pay a reasonable price therefor.”
Necessaries under this section are goods suitable to the condition in life of such
infant and to his actual requirements at the time of sale and delivery. As such,
where the goods are not suited to the infant’s condition in life and his actual
requirements, the sale would be unenforceable. See NASH V INMAN where the
infant bought far more suits than he needed and LABINJOH V ABAKE (1924) 5
NLR 33 where the infant got goods on credit for trade purposes. It is also implied
from this section that the goods must not only have been sold, they must also
have been delivered.
4. Consideration (Price): By the express definition of a contract of sale of goods in
S. 1(1), it is clear that the price must be paid in money. This is what essentially
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differentiates a contract of sale from an exchange. In the opinion of P.S. Atiyah,

the consideration in the contract of sale can be part money and part goods and
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indeed, this reasoning was that of the court’s in ALDRIDGE V JOHNSON (1857)
7 E and B 885 where an exchange of 52 bullocks with 100 quarters of wheat, the
difference in value to be made up in money, was treated as a contract of sale.
Though, the learned author reasoned that this should only be the case if the
substantial part of the consideration constitutes money.
According to S. 8(1) SOGA, the price may be fixed by the contract i.e. the parties,
left to be fixed in a manner agreed e.g. by valuation, or may be determined by the
course of dealing between them i.e. their previous transactions or relevant
customs of the trade. Where the price is not fixed in any of the ways stipulated
above, S. 8(2) provides that the buyer must pay a reasonable price, which is a
question of fact and surrounding circumstances. In MATCO LTD V SANTA FE
DEVPT. CO. LTD (1971) 2 NCLR 1, it was held that the burden is on the seller to
prove that the price is reasonable.
Where there is no indication that a price was fixed by the parties, the contract
may be held ineffective. In MAY & BUTCHER V THE KING (1934) 2 KB 1, the
House of Lords held that the contract was ineffective as there was no indication
that the parties had agreed upon a price. See also NICOLENE LTD V SIMMONDS
(1953) 1 QB 543. Though, the courts are usually reluctant to strike down a
contract on this basis of uncertainty of price. They may infer from the conduct
of the parties or their previous dealings.
Under S. 9 SOGA, in an agreement to sell, where the parties agree that the price
is to be fixed by the valuation of a third party and the party fails to fix the price,
the contract is void. Though, if any goods have been delivered to and appropriated
by the buyer, he must pay a reasonable price therefor. Appropriation here may
mean that the buyer has adapted the goods to some particular use or has dealt
with them in a manner inconsistent with the rights of the seller. See S. 35 SOGA.
If the goods are not appropriated by the buyer, then there would be no contract.
If the valuer is prevented from making the valuation by either party, the innocent
party may sue the other for damages. In the opinion of M.C Okany, it is necessary
to distinguish between an agreement that involves valuation of the price by a
named third party and one that has no named valuer. He opines that it is only in
the former that S. 9 would apply while any default by the valuer in the latter case
would result only in the payment of a reasonable price.
5. Time: According to S. 10 SOGA, time is not ordinarily of the essence in a contract
of sale, except as agreed by the parties or if a different intention appears from
the terms of the contract. It was however held in the case of AMADI V THOMAS
APLIN & CO LTD (1972) 1 All NLR 409 where the contract involved a shipment of
fish, that in commercial contracts for sale of goods, time is of the essence as to
delivery. The court here was restating the position in the case of HARTLEY V
HYMANS (1920) All ER 328. Where the seller fails to deliver the goods at the
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time agreed, the buyer would be entitled to repudiate the contract. Where no
time is fixed however, S. 29(2) which is to the effect that the seller is bound to
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send the goods within a reasonable time would apply. The buyer may waive delivery
time however and when he does so, he cannot repudiate the contract. See
HARTLEY V HYMANS (supra). He would however be able to repudiate if he gives
a further deadline after the initial waiver. See CHARLES RICHARDS LTD V
OPPENHEIM (1950) 1 KB 616.
6. Goods: S. 62(1) SOGA defines goods as: “all chattels personal other than things
in action and money… emblements, industrial growing crops and things attached to
or forming part of land which are agreed to be severed before the sale or under
the contract of sale.” From this definition, it is clear that chattels personal like
choses in action are excluded. Also, real property is not within the ambit of goods
as contemplated within the Act. Emblements as referred to here are crops and
vegetables produced by the labour of man and ordinarily yielding an annual profit.
Industrial growing crops would cover other crops not of an annual nature. Goods
may generally be classified into specific/ascertained goods, existing goods,
unascertained goods and future goods. Though, future goods, if sufficiently
identified, may become specific goods. Specific goods are defined under S. 62(1)
as goods identified and agreed upon at the time a contract of sale is made. Future
and existing goods are defined under S. 5 SOGA.
TERMS OF THE CONTRACT
The terms of the contract are like the charter that binds the parties. It contains the
rights and obligations of each party to the contract. Under the common law, the terms
of a contract are read strictly, as they form the basis of whatever remedies can accrue
to either party. The courts have thus read the terms as the basic constitution of the
relationship between the parties and would strive to give it effect as it is. This would
however be subject to any rules as to illegality and public policy.
The terms of a contract traditionally include conditions and warranties. In modern times
however, other terms like innominate, intermediate and fundamental terms have been
developed by the courts while the parties have also evolved exemption clauses to limit
their liability under the contract.
CONDITIONS & WARRANTIES
Conditions are terms which are of vital importance in a contract. They normally contain
terms which are of the essence in a contract i.e. they go to the root of the contract.
Non-performance of a condition is usually regarded by a party as a failure to perform a
substantial obligation under the contract.
A warranty on the other hand is a term which is not as important as a condition. While it
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forms a part of the contract, its breach is not so serious in the opinion of the parties (or
the court) and would not constitute a failure to perform a substantial obligation under
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the contract. S. 62(1) SOGA defines a warranty as being collateral to the main purpose
of the contract. Okany defines it as “an ancillary obligation under a contract which may
be of lesser importance in comparison to a condition.”
The major difference between a condition and a warranty lies in the degree of liability
or effect which its breach would have on the contract. According to S. 11(1) (b) SOGA,
the breach of a condition would entitle the injured party to treat the contract as
repudiated while the breach of a warranty would only give the injured party a claim for
damages. The injured party may also have a claim in damages in addition to his right to
treat the contract as repudiated and demand any money he has paid. The question of
whether a term is a condition or a warranty would depend on the circumstances of the
case and the construction of the contract by the courts. Under that section too, a
stipulation may also be a condition even if the parties have termed it a warranty. This,
as is the case in innominate terms, would depend on the effect which its breach would
have on the contract. According to the court in HORRISON V KNOWLES & FOSTER
(1917) 2 KB 606, a statement as to quality made about a specific chattel would be a
warranty unless the absence of that quality makes the chattel something different in
kind from what was envisaged and in that event, it would be a condition.
S. 11(1) (a) further provides that a buyer may waive a condition or may elect to treat its
breach as a breach of warranty. This waiver may be express or implied though, it must
be intentional. In CHARLES RICHARDS LTD V OPPENHEIM (supra), Lord Denning was
of the view that “the whole essence of waiver is that there must be an intention to affect
the legal relations of the parties.” Furthermore, where the condition is waived
temporarily, the buyer cannot validly cancel the contract without giving the other party
reasonable notice to enable him fulfil his obligation(s).
S. 11(1) (c) provides a caveat to the effect that where a contract of sale is not severable,
and the buyer has accepted the goods or part or where the contract is for specific goods
and property has passed to the buyer; if the seller breaches any condition, it can only be
treated by the buyer as a breach of warranty, subject to any express or implied term to
the contrary within the contract. Though, this breach of condition would not exculpate a
seller who wishes to hide under a clause that excludes claims for breach of warranty.
See WALLIS, SON & WELLS V PRATT & HAYNES (1910) 2 KB 1003.
TERMS AND REPRESENTATION
A representation is usually not treated as a term of the contract. It is deemed collateral

to the contract and may ordinarily be made to induce a party to enter into the contract.
Thus, where it is unfounded, it often gives no rise to liability. The question of whether a
statement is a term or a mere representation would depend on the construction given to
it by the courts, the intention of the parties as deducible from their conduct and the
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surrounding circumstances of the contract. Though, if the statement is made at the time
the contract is being made and the buyer relies on the statement as being made out of
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the special knowledge/skill of the seller, it may be treated as term. Also, the rules as to
misrepresentation would apply if the statement was made fraudulently or negligently.
EXEMPTION CLAUSES AND FUNDAMENTAL TERMS
Parties are generally free to contract as they see fit and as such, they often take steps
to limit their liability under the contract. According to S. 55 SOGA, the parties to the
contract are free to exclude or vary any of the terms implied by the Act. In practice
however, these exemption clauses are usually made by the seller, to negative terms which
may be implied to favour the buyer. They have often brought great hardship to the buyer
and terribly tilt the playing ground towards the seller. By employing means such as small
print, clauses which are discovered too late and those which would give the buyer no
realistic chance of effecting a change, they create injustice against the buyer and take
away any means of reprieve he would ordinarily have had. As such, the plaintiff in
L’ESTRANGE V GRAUCOB (1934) 2 K 394 was forced to take a defective machine
because he had not read the small print which excluded any condition or warranty implied
by law.
The courts are however reluctant to be willing players in this game of injustice and as
such, they view exclusion clauses darkly. They ordinarily seek to exploit any loopholes in
the clause to the favour of the buyer. This policy was the rationale behind the holding
of the court in the case of WALLIS, SON & WELLS V PRATT & HAYNES (supra) where
the seller, after he had breached a condition which the buyer could not act on because
of S. 11(1) (c), sought to rely on a clause which barred claims for breach of warranty.
These clauses are thus interpreted strictly against the party relying on them and if there
is any incongruity or ambiguity in the wording, it would be resolved against him.
Furthermore, exclusion clauses introduced unilaterally are not enforced by the courts,
especially where they are brought in after the contract is concluded and in any case,
they would ordinarily be unenforceable if they are not brought to the attention of the
other party. Another rule of construction used to ameliorate the injustice of exemption
clauses is fundamental term rule.
The doctrine of fundamental term is based on the recognition that in every contract,
there is a central obligation around which the entire contract revolves. If that central
obligation is not fulfilled, and its breach has the effect of rendering the contract
meaningless or something else entirely, the offending party would not be allowed to hide
under an exemption clause, no matter how widely or precisely couched. Thus, if a bag of
oranges is supplied instead of a bag of apples, the central obligation of providing apples
is unfulfilled and the buyer is entitled to treat the contract as repudiated in addition to
a claim for any damage resulting. In OGWU V LEVENTIS MOTORS LTD (1963) NRNLR
115, the plaintiff entered into a hire purchase agreement for a one-year old lorry. The
contract between the parties contained a clause excluding any warranty as to fitness and
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roadworthiness inter alia. The lorry eventually delivered to the plaintiff was actually five
years old and had its number plate switched to the one the plaintiff initially wanted. The
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court held that the defendants could not rely on the exemption clause as he did not catty
out the contract in its essential respect. See also KARSALES (HARROW) LTD V WALLIS
(1956) 1 WLR 936.
IMPLIED TERMS IN A CONTRACT OF SALE
The terms implied by the SOGA are prima facie in favour of the buyer. The common law
rule of caveat emptor had basically given the seller a free pass and as such, he was not
obliged to make any undertakings as to title, fitness or any other except as contained
under the express terms of the contract. The terms implied under the Act impose certain
minimum expectations/obligations upon the seller and the breach of any one of them may
have the effect of a condition or warranty. The terms include:
1. Title: According to S. 12(1) SOGA, there is an implied condition that the seller
has the right to sell the goods or the he will have such rights at the time of sale
in an agreement to sell. It is thus clear that it is quite essential that the seller be
able to transfer property in the goods to the buyer. Where he has no such ability,
there is a total failure of consideration on the part of the seller and the buyer
would be entitled to repudiate the contract. He may also sue for the price even
where he has used the goods for a while. See ROWLAND V DIVAL (1923) 2 KB
500 and AKOSHILE V OGIDAN (1950) 19 NLR 87. This implied condition obviously
resonates with the principle of NEMO DAT QUOD NON HABET. It is also clear
that the seller would be unable to avoid his culpability by acquiring title to the
goods after the sale.
There is an implied warranty that the buyer will enjoy quiet possession of the
goods and also that the goods are free from any encumbrance or charge in favour
of any third party that was not brought to the buyer’s notice at the time of
contracting. Thus, where the buyer’s full possession of the goods is interrupted
by a third party acting within his rights, the seller would be liable to him in
damages. See NIBLETT V CONFECTIONERS’ MATERIALS CO. (1921) 3 KB 387.
It must be emphasized however that this condition may be excluded by the
parties via their contract.
2. Sale by Description: S. 13 SOGA provides that where there is a sale by
description, there is an implied condition that the goods shall correspond with the
description. Where the sale is by sample as well as description, it is immaterial
that most of the goods correspond with the sample if they don’t correspond with
the description. A sale by description as contained in this section has been held
to mean a situation where the purchaser has not seen the goods but is relying on
the description alone. See VARLEY V WHIPP (1900) 1 QB 513, where the reaping
machine described to the buyer was different from what he was delivered. For a
sale to qualify under this section, it may be immaterial that the sale relates to a
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specific item which the buyer has inspected. It would suffice if he relied on the
seller’s description and the description relates to something not apparent upon
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inspection. See BEALE V TAYLOR (1967) 3 All ER 253 CA. it would also suffice if
that specific thing is not sold merely as the specific thing but as a thing
corresponding to a description e.g. a sale of woollen pants. See GRANT V
AUSTRALIAN KNITTING MILLS LTD (1936) AC 85.
Every part of a description which constitutes a vital/substantial ingredient in the
identity of the thing sold is a condition, the breach of which entitles the buyer to
treat the contract as repudiated. This includes the manner of packing (RE:
MOORE & CO LTD V LANDAUER & CO (1921) 12 KB 519) and insubstantial
difference in measurement (ARCOS LTD V RONAASEN & SON (1933) AC 470).
It is thus insufficient that the goods be “commercially within” the description,
the correspondence must be exact. Though, the courts would not bother
themselves with microscopic differences.
As to a sale by sample and description, the case of BOSHALI V ALLIED
COMMERCIAL EXPORTERS LTD (1961) All NLR 917 is apt. In that case, the buyer
wanted bales of cloth supplied to him by the seller on the description given him
by their letter. The sellers later sent a sample of the cloth to him. When they
delivered the cloth, some tallied with the sample, while others did not. The court
held that the buyer was entitled to relief because the sample could be taken as
evidence of description.
3. Fitness for Purpose: S. 14 states that there is ordinarily no implied condition or
warranty as to fitness for purpose, except as contained in any statutes or the
Act. In Nigeria, the National Agency for Food and Drugs Administration and
Control Agency Act (NAFDAC) would imply this obligation, especially under its S.
5. The Act also provides exceptions to this general rule.
S. 14(1) is to the effect that where the buyer makes known to the seller, the
particular purpose for which he requires the goods such that he relies on the
knowledge/skill of the seller and the goods are of a description as the seller
ordinarily sells, there would be an implied condition that the goods are reasonably
fit for that purpose. In order to obtain relief under this section, the buyer must
have made the purpose which he had in mind for the goods known to the seller.
This knowledge may be express or implied. Where implied, it may be gathered
from the description of the goods by the buyer to the seller. See PRIEST V LAST
(1903) 2 KB 148 where the buyer asked for a hot water bottle and FROST V
AYLESBURY DAIRY COMPANY LTD (1905) 1 KB 608 where the contract was for
the supply of milk which was found unfit for human consumption. See also GRANT
V AUSTRALIAN KNITTING MILLS LTD (supra). It is clear from these cases
that the knowledge may also be constructive. The seller would not however be
liable if there is some peculiarity about the buyer’s purpose of which he was
unaware.
The buyer must also prove that he relied on the seller’s skill or judgment. Where
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the buyer expressly makes known to the seller, the purpose for which he needs
the goods, it may show a reliance on that seller’s skill or judgment if the contract
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is concluded on that basis. Also, where the goods are ordinarily used for that
purpose and one out of many is given to the buyer, one may reasonably infer that
the buyer has relied on the seller’s judgment that the one given to him would be
adequate. See GODLEY V PERRY (1960) 1 WLR 9 where a six year old boy asked
for a catapult and was given one which broke and ruptured his eye. Furthermore,
even where the goods are made to the buyer’s specifications, he may still be
relying on the seller’s skill and judgment.
The buyer must also prove that the goods are of a nature as is ordinarily sold by
the seller. It would not matter that the goods are of a special nature in so far as
they are of the general nature ordinarily sold by the seller.
However, as per the proviso to the rule, it would not apply where it relates to the
sale of a specified article under its patent or other trade name as the buyer is
deemed to be familiar with such goods and is not relying on the seller’s skill and
judgment. Though, where the buyer asks for goods fitting a particular purpose
generally and a good that has a patent or trade name is offered by the seller, the
exception would not apply. See BALDRY V MARSHALL (1925) 1 KB 260.
4. Merchantable Quality: S. 14(2) SOGA provides that where goods are bought by
description from a seller who sells goods of that description, there is an implied
condition that the goods shall be of merchantable quality. The question of what
constitutes a sale of goods by description was answered by the courts in VARLEY
V WHIPP (supra). The goods (in the sale by description) must also be one that the
seller ordinarily deals in. In BRISTOL TRAMWAYS CO LTD V FIAT MOTORS
LTD (1910) 2 KB 831, the court per Farwell J. defined merchantable as meaning
that the article is of such condition that a reasonable man acting reasonably
would, after full examination, accept it in performance of his offer to buy it. It
was further held in GRANT V AUSTRALIAN KNITTING MILLS LTD (supra) that
merchantable quality does not necessarily mean that the thing is saleable in a
market, it is not merchantable if it has defects unfitting for its proper use even
if such defects are not apparent on ordinary examination. If something has to be
done to make the goods usable, no matter how trivial, the goods cannot be said to
be of merchantable quality.
The proviso in S. 14(2) however provides that: if the buyer has examined the
goods, the rule will not apply as regards defects which such examination ought to
have revealed. If the defect is apparent, and the buyer fails to examine the goods
when given the chance to do so, or when given the chance, he fails to conduct a
satisfactory examination, the seller has no liability. See BRITISH & OVERSEAS
CREDIT LTD V ANIMASHAUN (1961) 1 All NLR 343 where the plaintiff imported
1000 cases of tomato paste and failed to examine the them even when given the
chance. The buyer would also have no remedy where his attention was drawn to
the defect am he failed to act on it. Where the defect is latent and not apparent,
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the seller would still be liable. See WREN V HOLT (1903) 1 KB 486 where it was
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held that no examination by the buyer would have revealed that the beer which
he bought was contaminated by arsenic.
5. Sample: Three implied conditions are contained under S. 15 as it concerns sale by
sample. However, before these conditions are looked at, it is instructive to
examine what is meant by a sale by sample. S. 15(1) SOGA provides that a contract
is a sale by sample where there is a term of the contract, express or implied, to
that effect. Thus, the fact that a sample was shown during negotiations does not
make it a sale by sample. See BOSHALI V ALLIED COMMERCIAL EXPORTERS
LTD (supra). Though, a custom may make such production of a sample a term of
the contract.
The first condition contained under S. 15(2) (a) is to the effect that there is an
implied condition that the bulk shall correspond with the sample in quality. This
correspondence must be complete, it is not sufficient that the bulk may be made
to correspond with the sample by some simple process.
The second as contained under S. 15(2) (b) is that there is an implied condition
that the buyer shall have a reasonable opportunity of comparing the bulk with the
sample. Where he is not availed of this opportunity, he can treat the contract as
repudiated and he is not deemed to have accepted the goods until he has such
opportunity. See S. 34 SOGA. The place of delivery is usually the place for
examination though, the contract may provide otherwise.
There is also an implied condition, under S. 15(2) (c), that the goods shall be free
from any defect, rendering them unmerchantable, which would not be apparent on
reasonable examination of the sample. The seller thus finds no protection in
respect of latent defects. See GODLEY V PERRY (supra). Under this condition, it
seems it would be immaterial that the buyer failed to examine the goods. See
WREN V HOLT (supra). Furthermore, a reasonable examination is not expected
to constitute a total examination that consists in taking the entire goods apart.
PERFORMANCE OF THE CONTRACT OF SALE
The contract of sale is performed when the seller delivers the goods and the buyer
accepts and pays for them. See S. 27 SOGA.
1. Delivery: S. 62(1) SOGA defines delivery as voluntary transfer of possession from

one person to another. The parties to the contract of sale are generally free to
make any arrangements they wish to make for delivery. This delivery may be actual
or constructive. It is actual where there is an apparent handover of goods from
seller to buyer while it is constructive where some document which will entitle the
buyer to possession of the goods is given by the seller. If the goods are in the
possession of a third party, the seller impliedly undertakes that they shall be
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delivered in reasonable time. Where the parties fail to prescribe a procedure, SS.
28 & 29 would apply. S. 28 states that delivery and payment are concurrent
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conditions as the seller must be willing and ready to give up possession and the
buyer must be ready and willing to pay. Where the delivery is to be in instalments,
the rule would apply to each instalment. S. 29 SOGA provides the rules that would
apply as to delivery in the absence of any contrary intention by the parties.
a. Rule 1 is to the effect that whether it is for the seller to send the goods
to the buyer or for the buyer to take possession of them is a question of
the terms of the contract, express or implied. Subject to the contract,
the place of delivery is the seller’s place of business or his residence. If
the sale is for specific goods, which to the knowledge of the parties when
the contract is made are in some other place, that place is the place of
delivery.
b. Rule 2, contained in S. 29(2) provides that where the seller is bound to
send the goods to buyer and no time for sending it is fixed, the seller is
bound to send them within a reasonable time. See S. 10 SOGA
c. Rule 3 provides that where the goods, at the time of sale, are in the
possession of a third party, there is no delivery by the seller unless and
until the third party acknowledges to the buyer that he holds the goods on
his behalf though, this rule would not affect the issue or transfer of title
documents to the buyer by the seller. This method of delivery is called an
attornment.
d. Rule 4 is to the effect that demand of delivery or tender of same is
ineffectual unless made at a reasonable hour which is a question of fact.
S. 56.
e. The final rule posits that unless otherwise agreed, the expenses of putting
the goods in a deliverable state (where they aren’t) and any cost incidental
thereto must be borne by the seller.
Where the seller delivers less goods than stipulated under the contract, the
buyer is entitled to reject them. He may accept the goods, though where he does
so, he must pay the contract rate. See S. 30(1). Where the seller delivers more,
the buyer may accept those contracted for and reject the rest or reject the
whole. If he accepts the whole, he must pay for them at the contract rate. See
S. 30(2). Where there is a mixture of the goods contracted for with goods of
another description, the buyer may accept those contracted for and reject the
rest or he may reject the whole. See S. 30(3). The rules as to delivery here will,
as stated earlier, be subject to the agreement of the parties and by virtue of S.
30(4) they would also be subject to any usage of the trade, special agreement or
course of dealing between the parties. One of these usages concerns a sale of
approximate quantities. In such sales, the seller is allowed a reasonable margin to
either provide less or more than contracted for. As such, the court would not
concern itself with a trifling/minor difference because DE MINIMIS NON
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CURAT LEX.
11
Where it concerns instalment deliveries, the Act provides in S. 31(1) that unless
otherwise agreed by the parties, the buyer is not bound to accept delivery of the
goods in instalments. Where the contract is to be delivered in instalments, which
are to be separately paid for, and the seller delivers a defective instalment(s) or
the buyer neglects or refuses to take delivery of or pay for any instalment, it is
a question of fact whether the breach would have the effect of a condition or
warranty. In MAPLE FLOCK CO LTD V UNIVERSAL FURNITURE PRODUCTS
(WEMBLEY) LTD (1934) 1 KB 148, the court held that: whether a breach in
respect of one instalment amounts to a repudiation is a question of fact depending
on the quantitative ratio of the instalment to the whole and the likelihood of
repetition of the breach.
Delivery to a carrier by the seller, where he is authorized to send them to the
buyer, would qualify as delivery to the buyer under S. 32(1) SOGA. This section
would ordinarily apply where the obligation of the seller is to place the goods on
a carrier named by the buyer. Though, it would still apply irrespective of such
naming. S. 32(2) is to the effect that the seller must make a reasonable contract
with the carrier, having regard to the nature of the goods and the surrounding
circumstances. If he fails to do so, and the goods are lost or damaged in transit,
the buyer may decline to accept the delivery or sue the seller for damage caused.
S. 32(3) imposes an obligation upon the seller to give such notice to the buyer as
may enable him to insure the goods where they must be in sea transit. If he fails
to do so, the goods shall be deemed to be at his risk during such transit.
In the opinion of Okany, these sections would not apply to contracts where the
buyer has to pay, as part of the price, the cost of insurance and freight. In such
contracts, delivery is made when the shipping documents are tendered to the
buyer. As such, property is passed upon such tender although, risk passes once
the goods are in transit.
Where the seller of the goods agrees to deliver them at his own risk at a place
other than their location when they were sold, the buyer must bear any risk of
deterioration of the goods necessarily incident to the course of transit. See S.
33 SOGA. Thus, the deterioration must be normal to such transit. Where the
seller of perishable goods or otherwise sends them in a condition that they will
inevitably deteriorate in the normal course of transit, this condition will not avail
him. Furthermore, where the seller agrees to deliver the goods to the buyer’s
house, and he delivers them to someone there who appears to have authority to
receive them on behalf of the buyer, if that person loses or misappropriates them,
the seller would not be liable. Though, he must not have acted negligently.
As stated earlier, a prima facie condition as to time being of the essence has been
implied by the courts in commercial contracts that involve goods of a perishable
nature. See AMADI V THOMAS APLIN & CO LTD (supra)
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2. Acceptance: It is incumbent upon the buyer to accept the goods by taking

possession of them. Once again, this acceptance may be express, implied, actual
12
or constructive. There is generally no implied term as to the time of acceptance,

although S. 20 SOGA imposes upon the buyer, liability for any damage,
deterioration or loss that arises from delay in taking delivery. He is also expected
to take delivery within a reasonable time, otherwise the seller would be justified
in thinking that he has repudiated the contract and he would be liable to the seller
for any loss occasioned by his failure to take delivery as well as a reasonable
charge for the custody of the goods. See S. 37 SOGA.
By the provisions of S. 34(1), the buyer, if he has not previously examined them,
is not deemed to have accepted the goods until he has had a reasonable
opportunity of examining them. Furthermore, under S. 34(2), the seller, when
making his delivery, is bound, on the request of the buyer, to afford him a
reasonable opportunity of examining the goods.
S. 35 provides the rules for acceptance of the goods. That section provides that
the buyer would be deemed to have accepted the goods when:
a. He intimates to the seller that he has accepted them; or
b. He does any act inconsistent with the ownership of the seller when the
goods have been delivered to him, except where such act is for the purpose
of examining the goods; or
c. After the lapse of a reasonable time, he retains the goods without
intimating the seller that he has rejected them.
Once accepted, the buyer loses the right to reject the goods and where the
contract is not severable, and he has accepted part of them, or in a contract for
specific goods, the buyer can only treat a breach of condition as a breach of
warranty. See S. 11(1) (c). This rule would of course be inapplicable where the
contract is severable and where it is excluded under the contract. Where the
right to reject is lost, so is the right to rescind the contract. See LEAF V
INTERNATIONAL GALLERIES (1950) 1 All ER 693. The buyer can intimate the
seller of his acceptance in writing or orally.
Where the goods have been delivered to the buyer and he rightfully refuses to
accept them, he is not bound to return them to the seller. All he need do is
intimate the seller of his refusal to accept the goods. See S. 36 SOGA.
3. Payment: The buyer has a duty to pay for the goods once delivered as per the
contract. See SS. 27 & 28 SOGA. Where payment is made by some negotiable
instrument, it is regarded as a conditional payment until it is cleared. S. 10(1)
provides that stipulations as to time of payment are not of the essence in a
contract of sale, except where there is an intention to the contrary. Thus, where
there is no express intention as to time of payment, failure to pay the price within
a reasonable time would only entitle the seller to an action for damages.
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TRANSFER OF PROPERTY
13
Property, as defined under S. 62(1) SOGA refers to “general property in the goods and
not merely special property”. Property as referred to here would mean dominion or
control of the property as opposed to mere possession. As such, as per the definition of
a contract of sale in S. 1(1) SOGA, only the seller of goods has the power to transfer
property in goods to the buyer and to obviates a situation where the person selling the
goods is not the owner, it was held in EICHOLZ V BANNISTER (1864) 17 CNNS 708 that
“the sale of a chattel is the strongest act of dominion that is incidental to ownership.”
Property in the goods must be distinguished from possession of the goods. Possession
only refers to physical custody of the goods while property connotes dominion over the
goods, essentially ownership of the goods. Also, transfer of property in the goods is not
consequent upon transfer of physical possession. The Act therefore envisages several
instances where property remains in one party while possession resides in another e.g.
the provisions as to transfer of title. The transfer of property almost always coincides
with the transfer of risk too. Thus, as a general rule, once property is transferred, risk
is also transferred.
The passing of property generally, as with basically all other aspects of the contract of
sale, is dependent on intention of the parties to the contract. The Act however provides
for different rules in relation to the category/kind of goods being contracted for viz.
specific/ ascertained goods and unascertained goods.
1. Specific/Ascertained Goods: In a sale of specific goods, the provisions of S. 17(1)

SOGA are to the effect that the property in the goods passes to the buyer at
the time the parties intend that it pass. S. 17(2) further provides that the
intention of the parties shall be divined from the terms of the contract, the
conduct of the parties and the circumstances of the case. Some of the
circumstances that may lead to inferences that property is intended to pass
include delivery of the goods to the buyer, delivery of title documents in the goods
to the buyer and delivery of either to an agent of the buyer.
Where the parties fail to make clear their intentions under the contract or where
the passing of property is not deducible from the conduct of the parties or
circumstances of the case, the rules in S. 18 SOGA shall apply. It must however
be noted that where property in the goods has passed in accordance with the
rules under S. 18, the parties cannot thereafter raise a contrary intention. See
DENNANT V SKINNER & COLLOM (1948) 2 KB 164.
a. Rule 1 is contained in S. 18(1) SOGA. It is to the effect that where there
is an unconditional contract for the sale of specific goods in a deliverable
state, the property in the goods passes to the buyer when the contract is
made and it is immaterial whether the time of payment, delivery or both
are postponed. Certain conditions must obviously obtain before this section
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can take effect. First is that the contract must be unconditional. This
means that the performance of the contract must not be subject to any
14
conditions, whether precedent or subsequent, for it to take effect. Second

is that the goods must be specific. S. 62(1) SOGA has defined specific
goods as “goods identified and agreed upon at the time a contract of sale
is made.” Though, unascertained goods or those sold by description may, if
sufficiently identified, qualify as specific goods. Whatever is however
clear is: specific goods are also ascertained goods. The third is that the
goods must be deliverable. S. 62(4) SOGA is to the effect that “goods are
in a deliverable state within the meaning of this Act when they are in such
a state that the buyer would, under the contract, be bound to take delivery
of them.” While this definition is not clear, and authorities are not decided
on what a deliverable state would mean practically, it is submitted that
goods are in a deliverable state when the buyer can take possession of
them as they are. This submission is further buttressed by rule 2.
Once the adduced conditions have been proved, the rule would have effect
and it would be immaterial that the goods have not been paid for or
delivered. An example of the operation of this rule is this: A goes into B’s
shop and agrees to buy a radio which is to be delivered and paid for the
next day. If B’s shop is burgled overnight and the radio is stolen, he can
sue A for the price, as property in the goods has passed to A.
b. Rule 2, as provided under S. 18(2) states: where there is a contract for
the sale of specific goods and the seller is bound to do something to the
goods, for the purpose of putting them into a deliverable state, the
property does not pass until such thing is done and the buyer has notice.
The fact of the seller being bound to do something to make the goods
deliverable is necessarily dependent upon the terms of the contract,
whether express or implied. The conditions under this rule are that the
goods must be specific and the buyer must have notice that the thing the
seller was bound to do has been done. Thus, where A contracts to buy a
car from B on the condition that B fix the faulty steering, property does
not pass to B until the steering is fixed and A has notice. This notice may
be actual or constructive though. If the buyer comes to the knowledge
that the thing has been done, even though it was not by the seller’s notice,
he would be deemed to have notice under this section.
c. Rule 3 provides that in a contract for specific goods in a deliverable state,
where the seller is bound to weigh, measure, test, or do something to
ascertain the price, property does not pass until same is done and the buyer
has notice. Once again, the goods must be specific and deliverable. If only
part of the goods has been weighed, only property in that part passes to
the buyer. See HANSON V MEYER (1805) 6 East 614. Where the goods
are to be weighed by the buyer or a third party, the rule will not apply, see
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NANKA BRUCE V COMMONWEALTH TRUST (1926) AC 77.
15
d. Rule 4 applies to goods sent to the buyer on “sale or return” basis and there
are two legs to the rule. The first leg is contained under S. 18(4) (a) and it
provides that property in the goods passes to the buyer when he signifies
his approval or acceptance to the seller or does any other act adopting the
transaction. The approval of the buyer may be express or implied. It is
especially implied where it concerns any act adopting the transaction. Such
an act may be one ordinarily consistent with ownership i.e. using, selling or
pledging the goods. See KIRKHAM V ATTENBOROUGH (1897) 1 QB 201.
The second leg, contained under S. 18(4) (b), provides that property in the
goods passes to the buyer if, without signifying his approval to the seller
or his rejection, he retains the goods for a period longer than that fixed
under the contract or a reasonable time. This leg of the rule would only
apply where it is the buyer that retains the goods. In RE: FERRIER (1944)
Ch. 295 the goods were seized by creditors of the intending buyer and
were held past the period fixed for return. The court held that property
had not passed to the buyer. The rule would not apply generally were the
goods were sent to the buyer unsolicited by him. Property as well as risk in
the goods would also remain in the seller before approval by the buyer.
2. Unascertained Goods: This category of goods is not expressly defined in the Act,
though it can be taken to mean an opposite of the definition for specific goods.
Okany is of the opinion that the term covers future goods, generic goods and
goods which form an unidentified part of a specified whole. Future goods are
defined under S. 5(1) SOGA as “goods to be manufactured or acquired by the
seller after making of the contract of sale.” Generic goods are those sold by
description alone while the last category refers to situations where the contract
quantity is deductible from a larger whole. The rules of passing of property may
slightly differ with respect to these categories.
3. Generally, the position of the Act as to unascertained goods is that property
cannot pass until the goods are ascertained. See S. 16 SOGA. The meaning of
ascertainment is not expressly contained within the Act but it was defined by
Lord Atkin in RE: EAIT (1927) 1 Ch. 606 as “goods identified in accordance with
the agreement after the time a contract of sale is made.” See HEALEY V
HOWLETT & SONS (1917) 1 KB 337. In order to determine whether property has
passed here, two rules are relevant.
a. The first is the rule in S. 17(1) SOGA which provides that in sale of
ascertained goods, property passes when the parties intend it to pass.
Thus, once the goods are ascertained in accordance with S. 16, the
provisions of S. 17 automatically apply. In order to deduce the intent of
the parties here, recourse must be had to S. 17(2). Where their intention
is not clear or where there is none evident, the rules in S. 18(1)-(4) would
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apply as those rules apply generally to ascertained as well as specific goods.
16
b. The second rule is contained under rule 5 of S. 18 SOGA. The rule is that:
in a sale of unascertained or future goods by description, where goods of
that description, in a deliverable state are unconditionally appropriated to
the contract, either by the seller with buyer’s assent or vice versa,
property passes to the buyer and the assent may be express or implied or
even given after or before the appropriation is made. There are several
conditions that must be satisfied here. First is that the sale must be by
description i.e. the goods have not been seen by the buyer and he is thus
relying on the description alone or he has seen a part and relies on
description for a part. See VARLEY V WHIPP (supra) and GRANT V
AUSTRALIAN KNITTING MILLS LTD (supra). Second, goods of that
same description must have been the subject of appropriation. This means
if the goods differ materially from the description, the rule will not apply.
Third, there must be assent, either of the buyer or the buyer, depending
on who is doing the appropriation. This assent may be express or implied,
and it may come before or after the appropriation. Where it comes before,
the property passes upon appropriation. See ALDRIDGE V JOHNSON
(supra). It may come after, as a result of delay and is thus implied as well.
See PIGNATORO V GILROY & SON (1919) 1 KB 459. The fourth is that
the goods must have been unconditionally appropriated, either by the seller
or the buyer but with the other’s assent.
It is not clear whether unconditional appropriation also means
ascertainment of the goods. The meaning of unconditional appropriation is
not definite either, as it may mean different things in relation to the types
of unascertained goods and the construction the courts would adopt
depends on the circumstances of the case. However, where the sale
involves an unidentified part of a specified whole, the goods would be
unconditionally appropriated when the seller sets them aside to be used in
fulfilling his contract with the buyer. In CARLOS FEDERSPIEL & CO. SA
V CHARLES TWIGG & CO LTD. (1957) 1 Lloyd’s Rep. 240, Pearson J.
formulated five rules for ascertaining if the goods have been
unconditionally appropriated. First is that the parties must have had an
intention to irrevocably attach the contract to those goods so that only
those, and no other, become the subject of the sale. Second is that the
appropriation is made by the agreement of the parties. Third is that there
is a constructive delivery before actual delivery where by the seller
becomes bailee of the buyer. Fourth is that where the risk in the goods
still resides with the seller, property also resides with him. Fifth is that
the appropriating act is usually the last thing to be done by the seller and
if a further act is still to be done by the seller, property does not pass
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until it is done.
17
Thus, property passes when an unconditional appropriation is made by

either of the parties, with the assent of the other. See ALDRIDGE V
JOHNSON.
The second leg of the rule is that where the seller delivers the goods to a
carrier, bailee or custodier (whether named by the buyer or not) in
fulfilment of the contract, without reserving the right of disposal, he is
deemed to have unconditionally appropriated the goods and as such,
property would pass under rule 5. This would however be subject to S. 16
SOGA. See HEALEY V HOWLETT & SONS (supra)
Generally however, going by the provisions of S. 19 SOGA, it seems property would not
pass in certain instances. S. 19(1) provides that in a sale of specific or subsequently
appropriated goods, the seller may, under the contract, reserve the right of disposal of
the goods conditionally. Where he does so, property in the goods does not pass to the
buyer until the conditions are fulfilled, notwithstanding that the goods have been
delivered to a carrier, custodier or bailee for transmission to the buyer. Where the bill
of lading is deliverable to his order or that of his agent, he is deemed to reserve the
right of disposal. If he sends the bill of lading together with the bill of exchange to the
buyer, the buyer must return the bill of lading if he does not honour the bill of exchange
and if he continues to hold onto the bill of lading, property in the goods does not pass to
him. See S. 19(2).
TRANSFER OF RISK
The general rule as to the transfer of risk is contained in S. 20 SOGA. That section
provides that: unless otherwise agreed by the parties, the goods remain at the seller’s
risk until property in the goods is passed to the buyer, whereupon the risk is transferred
to the buyer and it is immaterial that delivery has been made or not. The risk does appear
to pass with property in the goods. This general rule however has some exceptions viz.
1. The section is subject to the intention of the parties. Where there is a contrary
intention, the section won’t apply. See S. 56 SOGA.
2. The proviso to S. 20 provides that were delivery of the goods is delayed by the
fault of either party, the goods would be at the risk of the party at fault as
regards any loss that would not have occurred but for the fault.
3. Under S. 33 SOGA, the risk of deterioration of the goods remains in the buyer
even before passing of property.
4. Under S. 32(3) SOGA, even though property in the goods have passed to the
buyer, the seller would own the risk where he fails to give the buyer notice to
insure the goods.
5. Where the performance of a contract depends on delivery by a carrier, whether
named by the buyer or not, risk passes once the goods are delivered to the carrier.
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See S. 32(1) SOGA
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TRANSFER OF TITLE
The general assumption in a contract of sale of goods is that the seller, as owner of the
goods, has the right to sell the goods to the buyer. It is thus implied in a contract of
sale that the seller has title to the goods at the time of sale. Where a person who has
no title to the goods purports to sell them, the law regards such sale as being incapable
of passing a valid title to the supposed buyer. This rule is encapsulated in the maxim:
NEMO DAT QUOD NON HABET. Thus, where the sale is made by a person without title,
the effect operates to void the sale. See AKOSHILE V OGIDAN (1950) 19 NLR 87
This rule however seems harsh to third and sometimes, even fourth parties who may be
affected by the purported sale. The rule on the one hand strives to protect property in
goods while it, on the other hand, encroaches upon the security of commercial
transactions. If the rule were to apply in its pure manner, then a person could buy goods
in good faith, without notice of any defect in title of the owner and yet lose the goods
and the money he has paid for them, due to that defect. Happily, the rule is not without
exceptions and the majority of these exceptions revolve around buying in good faith, for
value and without notice of any defect in the seller’s title. The exceptions include the
following:
1. Sale by an agent: Ordinarily, an agent who is given power to act in the stead of
his principal can validly act in respect of such subject matter. As such, where an
agent is given the power to sell property on behalf of his principal, such sale is
valid. S. 21(1) SOGA buttresses this position as it provides that a person who does
not sell property under the authority or consent of the owner cannot transfer a
valid title. As such, where the sale is by the authority of the owner, the sale is
valid. See IMAM V A.B.U and S. 61(2) SOGA. However, what happens where an
agent, who is not given actual authority to sell the goods, eventually sells them?
Would such sale be valid? It is submitted that the sale would be valid if the agent
had apparent authority to sell goods generally for his principal, though not in
relation to that particular good. Furthermore, if the buyer purchases the
property for value, in good faith and without notice, the sale would be valid.
Though, it has been held that the agent would only transfer a good title if he has
the authority to sell not just as an agent but as an owner. See LLOYDS &
SCOTTISH FINANCE LTD V WILLIAMSON (1965) 1 WLR 404
2. Estoppel: Where the owner of goods represents, whether expressly or impliedly,
that another person has authority to sell them on his behalf, he would be estopped
from denying this is so and the sale would be valid. This provision is contained
under S. 21(1) SOGA, where the Act provides that the buyer acquires no title
unless the owner is by his conduct precluded from denying the seller’s authority
to sell. This estoppel may be express i.e. by words or implied i.e. from conduct.
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Okany also stratifies estoppel into two categories: by representation and by
19
negligence. Estoppel by representation is further subdivided in to words and

conduct.
Estoppel is inferred from words where the owner of the goods has made verbal
representations that the ‘seller’ is authorized to sell. It is inferred from conduct
where the owner, by his actions, creates an appearance, either that the goods
belong to the ‘seller’ or that he has authority to sell. This appearance may be
created by not only handing over possession of property to the ‘seller’ but by
handing him documents of title as well. For the buyer’s claim to succeed, he must
prove that there was some overt act on the part of the buyer that created that
appearance of ownership. See EASTERN DISTRIBUTORS LTD V GOLDRING
(1957) 2 QB 200.
Estoppel by negligence arises where the owner has made no representations that
another has authority to sell the goods but has, out of negligence, allowed another
person to persist in such appearance. It is however difficult to prove this type of
estoppel as there is usually no negligence unless a party owes another a duty to
take care. The buyer must thus prove that the owner owed him a duty to take
care and has failed in that regard. See MERCANTILE CREDIT CO. LTD V
HAMBLIN (1964) 2 All ER 592
3. Sale by a Mercantile Agent: According to S. 21(2) SOGA, the rule espoused under
S. 21(1) does not affect the provisions of the Factors Act or any enactment that
enables the apparent owner of goods to sell them as if he were the true owner. S.
2 of the Factors Act provides that any sale of goods by a mercantile agent, who
is in possession of goods with the consent of the owner, in the ordinary course of
his business would be valid as if he had the express authority of the owner to sell
provided that the buyer purchases in good faith and without notice of any defect
in his authority. For the sale to be valid under this provision, the following must
be fulfilled.
a. Seller must be a mercantile agent. It is not necessary that he ordinarily
acts as a mercantile agent, he may be so for just one transaction, in so far
as his actions there tally with that of a mercantile agent. See 1(1) Factors
Act and WEINER V HARRIS (1910) 1 KB 285
b. Must have obtained possession of the goods or documents of title. This
possession must be in his capacity as a mercantile agent, and the goods or
documents need not be in his personal custody. They may be in the custody
of someone he has control over. See S. 1(2) Factors Act.
c. Possession must have been with the consent of the owner. See S. 2(1)
Factors Act. If the agent obtains the goods or is in possession of them
with the owner’s consent, it would not matter that the consent is
subsequently withdrawn if the purchaser had no notice of such withdrawal.
See S. 2(2) & (3). It is further provided under S. 2(4) that the consent of
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the owner shall be presumed except where there is evidence to the

contrary.
20
d. The sale must have been in the ordinary manner in which it is usually
conducted. In STADIUM FINANCE LTD V ROBBINS (1962) 2 QB 664,
the court held that selling a car without its registration book was not
according to the normal course of business. Any such sale is invalid.
e. The purchaser must have bought for value without notice and in good faith.
S. 62(2) SOGA provides that a thing is done in good faith where it is done
honestly regardless of whether it was done negligently or not. See also S.
2 Factors Act.
4. Sale in a Market Overt: S. 22(1) SOGA is to the effect that where goods are sold
in a market overt in accordance with the usage of the market, the buyer acquires
a good title. This is of course subject to the overriding rule that the buyer must
have bought in good faith and without notice of defect. A market overt was
defined in LEE V BAYES (1856) 18 CB 599 as “an open, public and legally
constituted market.” It may be constituted by statute or by custom. See
BISHOPGATE MOTOR FINANCE CORP. V TRANSPORT BRAKERS LTD (1949) 1
KB 322. A market overt is a market for such things as are offered for trade and
these must be out in the open, where interested persons may see them. See
MARKET OVERT CASE (1911) 2 KB 1031. For a sale to come under this section, all
parts of the transaction must be made in the market. Delivery, acceptance and
payment must all be made there. The sale must also be open and public, there must
not have been any element of furtiveness or secrecy shrouding the sale. As such,
the sale must have been in accordance with the usage of the market. If it is one
where goods are sold by night, it would be valid though the general rule is that
the sale must have been completed between the hours of sunrise and sunset. See
BISHOPGATE MOTOR FINANCE CORP. V TRANSPORT BRAKES LTD (supra).
5. Sale under a voidable title: A voidable contract is one which is valid until set aside.
Where the seller of goods with a voidable title thereto sells them to another
before his title is avoided by the owner, the sale would be valid if the buyer
bought in good faith and without notice. See S. 23 SOGA. Of course, the sale
must have been voidable, not void. A contract would be held void on the ground of
unilateral mistake and no valid title would pass to the buyer even though he
purchased in good faith. See CUNDY V LINDSAY (1878) 3 App. Cas. 459 and
INGRAM V LITTLE (1961) 1 QB 31. Where misrepresentation is involved, the
contract is voidable but sale by the other party to a third party who has no notice
of the misrepresentation would be valid. However, the contract must not have
been rescinded before the time of sale. As a general rule, the owner can rescind
the contract by giving the other party notice before the time of sale.
6. Sale by seller or buyer in possession: By the provisions of S. 25(1) SOGA, sale by
a seller in possession occurs where a seller is in or continues in possession of the
goods or documents thereto after selling them to one person and he afterwards
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sells them to another who buys in good faith. This provision is in pari materia with
S. 8 of the Factors Act. The sale could have been made by the seller or by a
21
mercantile agent acting on his behalf. According to that section, the sale would
have the same effect as if it was authorized by the owner of the goods. For a sale
under this section to be valid, the seller must have continued in physical
possession of the goods or title documents thereto and it does not matter that
he remained in possession without the owner’s consent. If the owner’s consent was
induced by fraud, the section would still apply except where the fraud induces a
fundamental mistake that nullifies consent. See LONDON JEWELLERS LTD V
ATTENBOROUGH (1934) 2 KB 206. Where the seller continues in possession as
bailee of the owner, after his possession was interrupted, he cannot transfer a
good title here. See MITCHELL V JONES (1905) 24 NZLR 932. The goods or
documents thereto must also have been delivered or transferred to the buyer
who must have bought in good faith and without notice of defect. Where this is
not so, the sale would be invalid.
7. According to S. 25(2) SOGA, sale by a buyer in possession occurs where a buyer,
having bought or agreed to buy the goods, obtains them or documents to them
with the consent of the owner and sells them to another who buys in good faith.
He could also sell them via a mercantile agent acting on his behalf. Where this
occurs, the sale would have effect as if he were a mercantile agent, possessing
the goods or documents with the consent of the owner. This provision is also
similar to S. 9 of the Factors act. For a sale to be valid under this section, the
buyer must have obtained possession of the goods with the consent of the seller
whether obtained by fraud or otherwise and it would not matter that the consent
has been revoked in so far as the third party has no notice. See DU JARDIN V
BEADMAN BROS LTD (1952) 1 QB 712. There must have been a delivery of the
goods or title documents to the third party who must have bought in good faith.
8. Sale boy order of Court: This exception is contained in S. 26 SOGA. A sale of
property ordered by a court of competent jurisdiction will be valid. The buyer
must have bought in good faith and for valuable consideration though. The court
must also be one of competent jurisdiction.
9. Sale by special powers: S. 21(2) SOGA provides, as an exception to this rule, that
nothing in the Act shall affect any special Common law or statutory power of sale.
Thus, law enforcement agencies like the EFCC and Customs agencies can sell goods
seized or given up in the course of their duties. The common law power of sale is
implied in sale by an innkeeper/hotelier.
DUTIES & REMEDIES OF BUYER AND SELLER
Generally, the rights and duties of the parties to a contract of sale are determined by
the terms of the contract. Where a party is obligated to do something under the
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contract, his obligation is a duty owed to the other party and if the other party owes him
22
an obligation, it constitutes his own rights under the contract. Hence, the rights and
obligations of the parties consist in the terms of the contract they have agreed upon.
Specifically however, the seller has a duty to deliver the goods while the buyer has a
duty to receive them and pay for them. The seller also has a right to receive payment
for the goods and the buyer has a right to get the goods as agreed under the contract.
Where any of these rights is breached or any of the parties fails to perform his duty to
the other party, the injured party would be entitled to remedy. These remedies may
either be as provided under the contract or as provided by the law. The remedies open
to either party are as follows
REMEDIES OF THE SELLER
The remedies which a seller of goods has against the buyer may be classified into real
and personal remedies. Real remedies consist in reliefs against the goods while personal
remedies are reliefs against the buyer.
REAL REMEDIES
These remedies ordinarily apply to an unpaid seller of goods. An unpaid seller, as defined
by the SOGA, includes any person who is a seller under S. 62 (1) of the Act, or anyone in
the position of a seller such as a consignor or an agent responsible to the buyer or for
the price, who has not been paid or tendered the whole of the price or who received a
bill of exchange as conditional payment, which has been dishonoured. See S. 38(1) & (2).
The remedies which an unpaid seller would be entitled to under the SOGA include a lien
on the goods, stoppage in transit and a right of resale regardless of whether property in
the goods has passed to the buyer. Where property has not passed to the buyer, the
unpaid seller can exercise a right of withholding delivery of the goods. See S. 39 (1) &
(2).
1. LIEN: A lien is a right to retain possession of goods as security for the

satisfaction of payment. The right is exercisable notwithstanding the fact that
property in the goods has passed to the buyer. According to the provisions of S.
41 (1) SOGA, the right of lien is exercisable where:
a. The goods have been sold without any stipulation as to credit.
b. The goods have been sold on credit but the term of credit has expired.
c. The buyer becomes insolvent.
For a person to exercise the right of lien however, he must be in possession of
the goods and he must not have parted with possession of same. As will be shown
later, this would mean a termination of the lien. Again, no lien would be exercisable
where the payment is not yet due. If the goods were sold on credit, the term of
credit must have expired. Insolvency, according to S. 62(3) SOGA means one
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“who, either has ceased to pay his debts in the ordinary course of business, or
cannot pay his debts as they become due, whether he has committed an act of
23
bankruptcy or not…” The provisions of S. 41(1) are disjunctive. Once the conditions
for the operation of lien are fulfilled, the seller may validly exercise the right.
The lien is for the price of the goods only and not for charges for keeping the
goods during that period. Payment may also be validly made by a sub-purchaser
who would then be entitled to delivery. The right of lien may also be exercised by
the seller even if he is in possession of the goods as agent or bailee or custodier
of the buyer.
Where the seller has made part delivery of the goods, he may exercise his right
of lien or retention on the remainder, unless such part delivery has been made
under such circumstances as to show an agreement to waive the lien or right of
retention. See S. 42 SOGA
The lien terminates in the circumstances outlined under S. 43 (1) SOGA. Those
circumstances are as follows:
a. When the seller delivers the goods to a carrier or other bailee or custodier
for the purpose of transmission of the goods to the buyer, without
reserving the right of disposal of the goods, the lien terminates. This
delivery must however be with the purpose of transmitting the goods to
the buyer. If it is for any other purpose such as storage or movement, the
lien subsists. Also, the delivery must have been to an agent of the buyer.
If it was made to an agent of the seller, then he is still in possession, albeit
constructive possession. Where he delivers the goods to the agent of the
buyer, he may revive the lien by exercising his right of stoppage in transitu.
However, even if he does make such delivery, he would still be able to
exercise a right of lien where he reserves the right of disposal of the
goods. According to S. 19(2) SOGA, a right of disposal is reserved where
“goods are shipped and by the bill of lading, the goods are deliverable to
the order of the seller or his agent.” In such instance, property would not
have passed to the buyer and the goods would still be in the seller’s
constructive possession.
b. When the buyer or his agent lawfully obtains possession of the goods.
Lawful here may mean not tortiously or criminally. Though, the view has
been advanced that lawfully here actually means with the consent of the
seller as only this interpretation would be in harmony with S. 25(2) SOGA.
Once the goods enter the possession of the buyer’s agent too, the lien
terminates. However, notwithstanding the fact that the goods are in the
possession the buyer, there may be reserved to the seller, by express
agreement, course of dealing or usage of the trade; a special property in
the goods analogous to a lien. See DODSLEY V VARLEY (1840) 12 Ad & El
632.
c. When the seller expressly or impliedly waives the right of lien. This waiver
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may be implied where the buyer is given credit by the seller or where he
has initially assented/is in knowledge of a sub sale by the buyer. See S. 47
24
SOGA. He would be deemed to have waived the lien and would be bound to
make delivery.
d. When the buyer or his agent makes or tenders payment in full and final
satisfaction of the price.
The unpaid seller would however retain the lien even where he has obtained
judgment or decree for the price of the goods. See S. 43(2) SOGA. Also, the
contract of sale is not generally rescinded by the mere exercise of lien. See
S. 48(1) SOGA.
2. STOPPAGE IN TRANSITU: This right allows the unpaid seller to regain

possession of the goods when he has given up possession but while the goods are
still in the course of transit to the buyer. He would thus be able to stop the transit
and regain the goods in so far as they have not reached the buyer or his agent.
This right would only be exercisable where the buyer has become insolvent. Also,
the right would be exercisable regardless of whether property has passed or not.
Stoppage in transitu does vest property in the goods in the unpaid seller where
property has passed, it is only a right which may precede the exercise of a lien
amongst other rights. Goods are deemed to be in the course of transit from the
time they are delivered to the carrier for the purpose of transmission to the
buyer, until the buyer or his agent takes delivery of them. See S. 45(1) SOGA.
Once again, delivery to the carrier must be for the purpose of transmitting the
goods to the buyer.
If the buyer or his agent obtains possession of the goods before their arrival at
the agreed destination, the transit ends. See S. 45(2) SOGA. If the carrier, at
the agreed destination, acknowledges to the buyer that he holds the goods for
him as bailee or custodier, the transit ends notwithstanding the fact that a
further destination for the goods has been indicated by the buyer. See S. 45(3)
SOGA. If the buyer rejects the goods, and the carrier is still in possession, they
are still in transit regardless of whether the seller has received them back. See
S. 45(4). If the carrier wrongfully refuses to deliver the goods to the buyer or
his agent, the transit is deemed to be at an end. See S. 45(6) SOGA. Where part
delivery of the goods has been made, the remainder of the goods may be stopped
in transitu, unless such part delivery had been made under such circumstances as
to show an agreement to give up possession of the whole of the goods. The right
of stoppage in transitu also ends in the circumstances mentioned under S. 47
SOGA. If the documents of title to the goods have been transferred to any
person as buyer or owner of the goods, and without paying, such person transfers
the documents by way of sale to another for valid consideration, the right of
stoppage in transitu and lien is defeated and if the transfer was by pledge, the
rights under S. 39 SOGA can only be exercised subject to the rights of the
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transferee. See proviso to S. 47 SOGA.
25
The unpaid seller may exercise his right of stoppage in transitu by taking actual
possession of the goods by himself or through his agent, or by giving notice of his
claim to the carrier. This notice may be made to the person in actual custody of
the goods or his principal and in the latter case, the notice, to be effective, must
be given at such time and under such circumstances that the principal, by
reasonable diligence, may communicate to his servant or agent in time to prevent
delivery to the buyer. See S. 46(1) SOGA. When notice is given, the carrier must
redeliver the goods to the seller or according to his directions and the seller is
bound to bear the cost of this redelivery. See S. 46(2). If the carrier fails to
redeliver the goods to the seller or according to his instructions, he may be liable
to the seller for wrongful conversion. See BOOTH S.S. CO. LTD V CARGO FLEET
IRON CO. LTD (1916-17) All ER 938 CA. He may also be liable to the buyer if he
returns the goods to the seller when the transit is at an end. TAYLOR V GREAT
EASTERN RAILWAY CO. (1901) 1 KB 774.
Also, the contract of sale is not generally rescinded by the mere exercise of
stoppage in transitu. See S. 48(1) SOGA.
3. WITHHOLDING DELIVERY: The right of withholding delivery is provided for
under S. 39(2) SOGA. This right is exercisable where property in the goods has
not passed to the buyer and the rights exercisable here are similar to and co-
extensive with the rights of lien and stoppage in transitu where property has
passed to the buyer. Thus, a lien could be exercised after withholding delivery.
4. RESALE: There is no general right of resale but this resale is usually the
subsequent result of exercising the rights of stoppage in transitu, lien or
withholding delivery. The right would be exercisable where:
a. The seller sells the goods as a seller in possession under S. 25(1) SOGA.
This may however result in civil proceedings against the seller. See also S.
8 Factors Act.
b. The seller exercises his right of lien or stoppage in transitu and re-sells
to another person. There is no requirement here that the new buyer must
have bought for value and without notice. This may also result in civil
proceedings against the seller. See S. 48(2) SOGA
c. Where the goods are of a perishable nature, the seller has a right to resell
and even pursue damages for any loss occasioned by his breach. See S.
48(3) SOGA
d. Where the unpaid seller has given notice to the buyer of his intention to
resell and the buyer does not pay or tender payment within a reasonable
time. The seller may also claim damages for loss here. See S. 48(3) SOGA
e. Where the seller expressly reserves a right of resale in case of default
by the buyer. In such instance, the original contract is rescinded without
prejudice to any claim the seller may have for damages. See S. 48(4)
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SOGA.
26
f. If the buyer evinces an intention to repudiate the contract and such

repudiation is accepted by the seller.
In all these cases, resale rescinds the original contract of sale. See R V WARD
LTD V GIGNALL (1967) 2 All ER 449. In such instances of resale, the seller would
only be entitled to an action for damages and not an action for the price.
PERSONAL REMEDIES
Personal remedies are exercisable against the buyer. They can coexist with real
remedies. Thus, the fact that the seller has the option of real remedies does not restrict
his personal remedies against the buyer. These rights are also called personal because
they do not affect third parties, only the buyer. They are basically two and they are
categorized as actions for breach of the contract. This breach can only be as regards
non-payment of the price or non-acceptance of the goods. The remedies are:
1. ACTION FOR THE PRICE: The seller can maintain an action in court where the
buyer fails to pay the price and this right is obtainable in two respects. The first
is as contained under S. 49(1) SOGA and it is exercisable where the buyer
wrongfully neglects or refuses to pay for the goods according to the terms of the
contract after property in them has passed to him. The second is as provided for
by S. 49(2) and it is exercisable where, by the terms of the contract, the price
is payable on a day certain irrespective of delivery and the buyer wrongfully
neglects or refuses to pay the price. It would be immaterial that property in the
goods has not passed and the goods have not been appropriated to the contract.
A day certain means a day specified and not dependent on any contingency.
2. DAMAGES FOR NON-ACCEPTANCE: This right would become exercisable where
the buyer wrongfully neglects or refuses to accept and pay for the goods. This
action would be competent regardless of whether property in the goods has
passed to the buyer or not. See S. 50(1) SOGA. These damages, as provided under
S. 37 SOGA, include damages for any loss occasioned by the non-acceptance of
the buyer and a reasonable charge for the care and custody of the goods. The
measure of damages is the estimated loss directly and naturally resulting, the
ordinary course of events, from the buyer’s breach of contract. See S. 50(2)
SOGA. This provision codifies the general rule laid down in HADLEY V
BAXENDALE (1854) 9 Ex. 341. In order to determine the damages payable, the
court may defer to S. 50(3). That section provides that where there is an available
market for the goods, the measure of damages is prima facie to be ascertained
by the difference between the contract price and the market price at the time
the goods ought to have been accepted or at the time of refusal to accept. It
must be emphasized here that the rule reproduced above is only a prima facie rule
and may be dispensed with by the court. It would not be applied where the price
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of the goods have risen since the contract was made. The judge would be bound
in such situation, to give only nominal damages. See PREHN V ROYAL BANK OF
27
LIVERPOOL (1870) LR 5 Exch. 92. It would further be inapplicable if it is

insufficient to achieve the result intended by S. 50(2). Where it concerns retail
sales of goods that have a fixed retail price, the rule would not apply. In such
cases, the measure of damages is the retailer’s profit margin and he is entitled to
recover if he proves that he has lost a sale by the non-acceptance of the buyer.
If demand exceeds supply and he has lost no sale, he would only be entitled to
nominal damages. See CHARTER V SULLIVAN (1957) 2 QB 117.
It should be noted that the seller would also be entitled to special damages under S. 54
of the Act. In accordance with the rule laid down in HADLEY V BAXENDALE (supra), the
seller would only be entitled to obtain special damages if the circumstances that gave
rise to the loss were within the contemplation of the parties. It should be further noted
that seller would only have a valid claim where the buyer WRONGFULLY rejects the
goods or refuses to pay.
REMEDIES OF THE BUYER
The remedies of the buyer are generally against the seller and thus personal in nature.
These rights include the following:
1. DAMAGES FOR NON-DELIVERY: Where the seller wrongfully neglects or

refuses to deliver the goods to the buyer, the buyer may maintain an action for
damages for non-delivery. See S. 51(1). The remedy of the buyer in this respect
is not dependent on whether or not property has passed to him. The measure of
damages in this respect is the estimated loss directly and naturally resulting, in
the ordinary course of events, from the seller’s breach. See S. 51(2). Where there
is an available market for the goods, the measure of damages is prima facie to be
ascertained by the difference between the contract price and the market or
current price at the time the goods ought to have been delivered or at the time
of refusal to deliver. See S. 51(3) SOGA. As stated earlier, this is only a prima
facie rule that may be dispensed with by the court. The buyer may also claim
special damages under S. 54 SOGA, subject to the rule in HADLEY V BAXENDALE
(supra). Where there is a delay in delivery, the measure of damages under S. 51(3)
would be the difference between the date the goods should have been delivered
and the date they were delivered.
2. The courts ordinarily ignore any arrangements as to sub-sales made by the buyer
in their computation of damages accruable to the buyer. See SLATER V HOYLE &
SMITH (1920) 2 KB 11. An exception may however arise where the arrangement
as to sub-sale was assented to either expressly or impliedly by the seller. See S.
3. RECOVERY OF THE PRICE: Where the buyer has paid for the goods and there is
a total failure of consideration on the part of the seller or refusal to deliver the
goods, he may maintain an action for recovery of the price and this remedy would
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be co-existent with any action he wishes to maintain for damages. See S. 54
28
SOGA. A total failure of consideration may occur where the seller breaches a
fundamental term or where he fails to deliver the goods.
4. REJECTION OF THE GOODS: The buyer may elect to reject the goods and treat
the contract as repudiated where the seller has breached a condition in the
contract. This right would be limited in respect of separable contracts that
involve delivery in instalments, as provided under S. 31(2) SOGA. Whether the
buyer would be entitled to reject the goods in such situation would be a question
of fact. The buyer would lose the right to reject the goods where the contract is
not severable and have been accepted by the buyer or the goods are specific and
property in them has passed to the buyer under S. 11(1)(c) SOGA. The buyer would
also lose this right to reject the goods where he accepts them in accordance with
SS. 34 & 35 SOGA.
5. SPECIFIC PERFORMANCE: The buyer may have the option of approaching the
court for an order of specific performance if a breach occurs in a contract for
the delivery of specific or ascertained goods. The court is empowered under S.
52 SOGA to grant specific performance if it thinks fit and on any conditions it
sees fit. This remedy is usually only granted where the goods are rare, unique or
of special value to the buyer.
6. DAMAGES FOR BREACH OF WARRANTY: This remedy would be exercisable
where the buyer elects to treat the breach of a condition as breach of warranty,
where he is caught under the provisions of S. 11(1)(c) SOGA and where he has
accepted the goods despite a breach of condition. He may set up against the
seller, the breach of warranty in diminution or extinction of the price or maintain
an action for damages against the seller. See S. 53(1) & (2) SOGA. The fact that
the buyer has taken the former action would not affect his claim for damages on
the same breach of warranty if he has suffered further damage. See S. 53(4).
The measure of damages here is the estimated loss directly and naturally
resulting, in the ordinary course of events, from the breach. Where a warranty
as to quality had been breached, the loss suffered by the buyer is the difference
in value of the goods at the time of delivery and the value they would have had if
the right goods had been delivered. See S. 53(3) SOGA. The damages he would
be entitled to may also be computed on the basis of this.
EFFECT OF MISTAKE IN A CONTRACT OF SALE
Mistake under the general law of contract may give rise to several consequences and may
serve as a vitiating factor of an otherwise validly made contract. The Sale of Goods Act
also contemplates the occurrence of mistake and has made a specific provision in this
regard. In S. 6, the Act provides that where there is a contract for the sale of specific
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goods and the goods, without the knowledge of the seller have perished at the time the
contract was made, the contract is void. This provision basically incorporates the decision
29
of the court in COUTURIER V HASTIE (1856) 5 HLC 673 on common mistake. However,
the difference between this provision and common mistake is that the Act does not
stipulate whether the buyer should also have had no knowledge that the goods had
perished at the time.
DISCHARGE OF CONTRACT OF SALE
A contract of sale of goods may be discharged generally in any of the ways in which a
contract under the general law of contract may be discharged. These ways include
performance, discharge, frustration, and agreement. The Sale of Goods Act however
expressly takes into consideration only one of these instances viz. frustration. The Act
provides in S. 7 that where there is an agreement to sell specific goods, and subsequently
the goods, without any fault on the part of the seller or buyer, perish before the risk
passes to the buyer, the agreement is thereby frustrated. Generally, risk passes
whenever the parties intend it to pass.
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30

Commercial Law I

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Notes on Commercial Law

FORMATION OF A CONTRACT OF SALE

differentiates a contract of sale from an exchange. In the opinion of P.S. Atiyah,

TERMS OF THE CONTRACT

CONDITIONS & WARRANTIES

TERMS AND REPRESENTATION

A representation is usually not treated as a term of the contract. It is deemed collateral

EXEMPTION CLAUSES AND FUNDAMENTAL TERMS

IMPLIED TERMS IN A CONTRACT OF SALE

PERFORMANCE OF THE CONTRACT OF SALE

1. Delivery: S. 62(1) SOGA defines delivery as voluntary transfer of possession from

2. Acceptance: It is incumbent upon the buyer to accept the goods by taking

or constructive. There is generally no implied term as to the time of acceptance,

1. Specific/Ascertained Goods: In a sale of specific goods, the provisions of S. 17(1)

conditions, whether precedent or subsequent, for it to take effect. Second

NANKA BRUCE V COMMONWEALTH TRUST (1926) AC 77.

apply as those rules apply generally to ascertained as well as specific goods.

Thus, property passes when an unconditional appropriation is made by

See S. 32(1) SOGA

Okany also stratifies estoppel into two categories: by representation and by

negligence. Estoppel by representation is further subdivided in to words and

the owner shall be presumed except where there is evidence to the

DUTIES & REMEDIES OF BUYER AND SELLER

REMEDIES OF THE SELLER

1. LIEN: A lien is a right to retain possession of goods as security for the

2. STOPPAGE IN TRANSITU: This right allows the unpaid seller to regain

transferee. See proviso to S. 47 SOGA.

f. If the buyer evinces an intention to repudiate the contract and such

LIVERPOOL (1870) LR 5 Exch. 92. It would further be inapplicable if it is

REMEDIES OF THE BUYER

1. DAMAGES FOR NON-DELIVERY: Where the seller wrongfully neglects or

be co-existent with any action he wishes to maintain for damages. See S. 54

EFFECT OF MISTAKE IN A CONTRACT OF SALE

DISCHARGE OF CONTRACT OF SALE

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