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Sale of goods contracts

"Sale of Goods contracts are, without doubt, both the most common and the most important of all commercial contracts." I agree with this statement. Sale of goods contract is a most common type of contract in business as well as in daily life of people. But these days due to the improvement of technology, services are also being sold in different ways and it is becoming popular day by day. Since Sale of Goods contract is being in used from long time most of the business organizations deal in this contract. Therefore, "a Sale of good is defined as "an agreement whereby the seller transfers or agrees to transfer property in goods to the buyer for a money consideration called the price".

Under the sale of Goods Legislation, terms are implied into all contracts imposing duties on the seller in relation to title, correspondence with description, correspondence with sample, merchantable quality and reasonable fitness for purpose. In every contract for the sale of goods there are implied terms and it can be found under the Sale of Goods Act 1896 (QLD).

Implied Terms as to title

In a sale of goods contract there are the following implied terms, unless the contrary circumstances appears to show a different intention:

  1. An implied condition on the part of the seller that in the case of a sale the seller has a right to sell the goods, and that in the case of an agreement to sell the seller will have a right to sell the goods at the time when the property is to pass;
  2. An implied warranty that the buyer shall have and enjoy quiet possession of the goods;
  3. An implied warranty that the goods shall be free from any charge or encumbrance in favor of any third party not declared or known to the buyer before or at the time when the contract is made.

Implied Terms of correspondence with description

When there is a contract for the sale of goods by description there is an implied condition that the goods shall correspond with the description; and if the sale is by sample, as well as by description, it is not sufficient that the bulk of the goods corresponds with the sample if the goods do not also correspond with the description. the case of Harlington v. Christopher Hull shows that the implied term may only be breached if the buyer relied upon the description. Therefore if the buyer is an expert, reliance may not be established

Implied conditions as to quality or fitness

An implied condition that goods will be reasonably fit for such purpose is implied into contracts for sales of goods if:

  1. when the buyer, expressly or by implication, makes known to the seller the particular purpose for which the goods are required, so as to show that the buyer relies on the seller's skill or judgment, and the goods are of a description which it is in the course of the seller's business to supply (whether the seller is the manufacturer or not), there is an implied condition that the goods shall be reasonably fit for such purpose. An example of the application of this provision can be found in Godley v Perry ;
  2. however, in the case of a contract for the sale of a specified article under its patent or other trade name, there is no implied condition as to its fitness for any particular purpose;
  3. when goods are bought by description from a seller who deals in goods of that description (whether the seller is the manufacturer or not) there is an implied condition that the goods shall be of merchantable quality;
  4. however, if the buyer has examined the goods, there is no implied condition as regards defects which such examination ought to have revealed;
  5. an implied warranty or condition as to quality or fitness for a particular purpose may be annexed by the usage of trade, if the usage is such as to bind both parties to the contract;
  6. an express warranty or condition does not negative a warranty or condition implied by this Act unless inconsistent therewith.

Implied terms as sale by sample

A contract of sale is a contract for sale by sample when there is a term in the contract, express or implied, to that effect.

In the case of a contract for sale by sample

  1. there is an implied condition that the bulk shall correspond with the sample in quality; here is an implied condition that the buyer shall have a reasonable opportunity of comparing the bulk with the sample;
  2. there is an implied condition that the goods shall be free from any defect, rendering them unmerchantable, which would not be apparent on reasonable examination of the sample.

Implied terms of merchantable quality

The condition that goods will be of merchantable quality is implied where:

Therefore, a Contract of Sale of Goods is important for the smooth operation and exchange of goods in the economy. Sale of Goods act is always favored to have written contract as it serves as evidence in legal actions. A written and attested contract guarantees quality of the subject matter. The seller thus is duty bound to justify that the goods are merchantable, obey the rules to Industry standards and specifications. It prevents fraud and dishonesty on behalf of the subject matter of price by any of the parties. It allocates precise responsibilities upon the buyer and seller which they are bound to execute. The buyer has a duty to sensibly observe goods-hence it make a buyer more aware of what s/he is buying and therefore preventing mistake. A written contract makes definite transfer of rights of the goods to the buyer. Then the seller through the contract warrants finds out that the goods are free from any security interest liens, outstanding titles, claims or any other outstanding burdens. A contract ensures genuineness of two parties involved in the exchange. It also provides as a proof of a lawful transaction and prevents the selling party to make an illegal gain on any product sold.

Therefore, a Contract of Sale of Goods is important for the smooth operation and exchange of goods in the economy. Sale of Goods act is always favored to have written contract as it serves as evidence in legal actions. A written and attested contract guarantees quality of the subject matter. The seller thus is duty bound to justify that the goods are merchantable, obey the rules to Industry standards and specifications. It prevents fraud and dishonesty on behalf of the subject matter of price by any of the parties. It allocates precise responsibilities upon the buyer and seller which they are bound to execute. The buyer has a duty to sensibly observe goods-hence it make a buyer more aware of what s/he is buying and therefore preventing mistake. A written contract makes definite transfer of rights of the goods to the buyer. Then the seller through the contract warrants finds out that the goods are free from any security interest liens, outstanding titles, claims or any other outstanding burdens. A contract ensures genuineness of two parties involved in the exchange. It also provides as a proof of a lawful transaction and prevents the selling party to make an illegal gain on any product sold.

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