Nature of Contract of Sale

Sale of Goods transactions is undoubtedly the most frequent commercial activity of all times. In Nigeria, it is the most popular. A casual look at our roadside and popular markets will reveal the bulk of business activities going on. Buying and selling are usually done by simple contracts of sale. Why? Perhaps because of its simplicity. Each time you purchase a newspaper, sachet water, or munchies from the roadside vendor, a Sale transaction is invariably going on.

Sale transactions in the native settings have been known to customary law before colonial times. The influx of Europeans on a large scale however brought unprecedented dimensions to business activities. English law was introduced to regulate many commercial activities because of its peculiar nature. In England, an attempt to codify English commercial law led to the promulgation of the Sale of Goods Act 1893 (a statute of general application applicable in Nigeria by virtue of the reception clauses in our law which is still in force). Though some States have promulgated their respective Sale of Goods Law. Other statutes include Factors Act 1889, Infant Relief Act, Law Reform Contract Act.

The Sale of Goods Act 1893 is a codifying statute. As to the effect of a codifying statute on the state of law, see the dictum of Lord Herschell in Bank of England v Vagliano Brothers (1891) A.C. 107.

1. The language of the statute must be given its natural meaning without consideration of the state of the law before the statute was enacted.
2. The statute must be interpreted without reference to earlier decisions.

See Section 61(2) SGA

“The rules of the common law, including the law merchant, save in so far as they are inconsistent with the express provisions of this Act, and in particular the rules relating to the law of principal and agent and effect of fraud, misrepresentation, duress or coercion, mistake, or other invalidating cause, shall continue to apply to contracts for the sale of goods”.

In essence,

“The object and intent of the statute of 1893 was, no doubt, simply to codify the unwritten law applicable to the sale of goods, but in so far as there is an express statutory enactment that alone must be looked at and must govern the rights of the parties even though the section may to some extent have altered the prior common law “. Per Cozens M.R. in British Tramways and Carriage Co. v Fiat Motors Ltd. (1910)2K.B.832 at 836.

Thus, in interpreting the provisions of SGA, common law rules or pre-1893 case law will hardly be useful.

What is a Sale of Goods?

Notice that as a codifying statute, the SGA is its own dictionary. We must look within the four walls of the statute for the meaning of its words and phrases. Section 1(1) SGA | Section 3(1) SGL

“A contract of Sale of Goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a money consideration, called the price. There may be a contract of sale between one part owner and another.

Five things quickly emerge from the definition:

1. Contract: A Sale of Goods is primarily a contract (all your knowledge of the principles of Contract Law readily comes into play here. See section 61 SGA).
2. Parties: The transaction is usually between a seller and buyer. (Capacity of Parties to contract comes into play here, but “there may be a contract of sale between one part owner and another “)
3. Transfer: The core of the transaction is a ‘transfer of property’.
4. Goods: The subject matter of a sale is the item referred to as “goods”.
5. Price: The transaction is for a money consideration called “the price”.