Week 7 – SS3 Second Term Commerce Notes

 WEEK SEVEN
TOPIC: SALE OF GOOD ACT / HIRE PURCHASE ACT
CONTENT

• Sale of goods – application, definition and relevant Act
• Conditions constituting acceptance under the contract of sale of goods
• Duties and rights of parties to the contract
• Hire purchase Act 1975 – application and provisions

 NOTES
SALE OF GOODS
A contract of sale of goods is a contract whereby the seller transfer the property in goods to the buyer for a money consideration called the price.

 The parties to this contract are known as the seller (vendor or transferor) and the buyer (vendee or transferee). The seller must be either the owner of the goods or his duly authorized agent.

 The relevant law is the Sale of Goods Act 1893. This law does not cover the buying and selling of immovable or real property like land and houses. The Sale of Goods Act deals with only the rules and regulation which governs the buying and selling of personal movable property like motor vehicle, future, machinery, food, clothing and other similar commodities.

 PROVISION OF THE SALE OF GOODS ACT (1893)

1. A seller has the legal rights to offer goods for sale
2. The sample goods offered to the customer must have the same quality with the actual goods the seller display for sale
3. If the seller sells by description, the description must correspond with the description of the actual goods displayed for sale
4. The goods must be suitable for the purpose they are meant to serve
5. The goods offered for sale must be free from any claim in favour of any third parties (i.e. equities).
6. A buyer must examine carefully the goods he is to buy and make sure of the quality before buying and failure to do so; he bears the consequences of any default. This is the principle of “CAVAET EMPTOR” or “let the buyer beware”

 CONDITIONS THAT CONTITUES ACCEPTANCE IN THE CONTRACT OF SALE OF GOODS
In a contract of Sale of Goods, the buyer is deemed to have accepted goods (i.e.) taken over their ownership under the following circumstances

1. If he informs the seller that he has accepted them
2. If, after receiving the goods he does any act in relation to the goods which can only be done by the owner e.g. reselling the goods.
3. If he retains the good beyond a reasonable period without informing the seller that he rejected them.

 EVALUATION QUESTIONS

1. State three provisions of the Sales of Goods Act 1893
2. State three conditions that constitute acceptance in a contract of Sale of Goods

 DUTIES AND RIGHTS OF PARTIES OF THE CONTRACT
A.    Sellers owe the duty, subject to the express terms of the contract to:
i     Deliver the goods and at the right time
ii    Ensure that the goods supplied are of the right quantity and quality
iii    Pass good title to the buyer
B.    Buyers too owe the duty, subject to the express terms of the contract
i.    To accept and pay for the goods
ii.    To observed all stipulations as to time

 HIRE PURCHASE ACT 1975
This Act spells out the rights and duties of the hire purchaser (buyer) and the hire vendor (seller) and also protects the buyer from cheating and exploitation.

 PROVISION OF THE HIRE PURCHASE ACT (1975)
i.    In hire purchase transactions the cash sale price must be shown along with hire purchase price to enable the buyer know the difference.
ii.    If the buyer defaults after paying 1/3 of the hire purchase price the seller cannot repossess the article except through court order
iii.    The buyer has the right to stop paying the installments and return the article if he has paid ½ of the hire purchase price.
iv.    Where the buyer is compelled or made to sign the Hire Purchase agreement at his home, he has the right to cancel it within three days of the contract.

 EVALUATION QUESTIONS

1. State two duties of buyers in a sale of goods.
2. State two provision of the Hire Purchase Act (1975)
3. State six differences between Hire Purchase and Deferred Payment

 GENERAL EVALUATION QUESTIONS

1. Explain five factors affecting the choice of transportation of frozen products
2. State five disadvantages of air transport
3. State seven features of a public corporation
4. List and explain six new trends in retailing
5. State five features of a mail order business

READING ASSIGNMENT
Essential Commerce for SS by A. O. Longe Page 288 – 290

 WEEKEND ASSIGNEMNT
1.     A contract of sale where ownership passes to the buyer on the payment of the first installment is known as (a) hire purchase (b) lease (c) cash on delivery (d) credit sale
2. Which of the following goods is not covered by the Sale of Goods Act (a) generator (b) sugar (c) land (d) motor vehicle
3.    A contract for the sale of goods involves the (a) exchange of goods (b) producer, the seller and the buyer of goods (c) offering of goods to customers (d) transfer of title to goods for money.
4.    An agreement to sell is distinguishable from a sale because in the former, the transfer of goods is (a) not anticipated (b) not discussed (c) deferred (d) immediate
5.    Adigun displays goods of different makes on shelves in his supermarket. This is an example of (a) invitation to treat (b) offer to sell (c) offer to purchase (d) invitation to sell

 THEORY

1. State two provisions of the sale of Goods Act 1893
2. State four features of Hire Purchase