PENTECOST UNIVERSITY

FACULTY OF LAW
LEVEL – 300 REGULAR/WEEKEND
BY EMMANUEL DZAGELI
 DEFINITIONS
What is commercial law?
Writers on the subject have put forward various definitions.
Some of the definitions are:
COMMERCIAL HW Disney defines Commercial law “is an expression
incapable of strict definition, but it is used to comprehend all
LAW 1 that portion of the law of England which is more especially
concerned with commerce, trade and business”.
LS Sealy and RJA Hooley in their book Commercial Law,
Text, Cases and Materials (4th Edition) defined Commercial
law as “represents the totality of the law’s response to
mercantile disputes. It encompasses all those principles, rules
and statutory provisions, of whatever kind and from whatever
source, which bear on the private law rights and obligations of
parties to commercial transactions, whether between
themselves or in their relationship with others”.
 HC Gutteridge defined commercial law as “the special
rules which apply to contracts for the sale of goods and
to such contracts as are ancillary thereto, namely,
contracts for carriage and insurance of goods and
contracts the main purpose of which is to finance the
carrying out contracts of sale”.
DEFINITIONS Professor Sir Roy Goode the leading academic
CON’T commercial lawyer has described Commercial law as
"that branch of law which is concerned with rights and
duties arising from the supply of goods and services in
the way of trade"
He further notes that, the subject of Commercial law is
not well defined and that no two books adopt the same
approach to the definition.
 There are two main sources of Commercial
Law namely;
SOURCES - The common law on contract of sale of
OF goods.
COMMERCIAL - The second source of Commercial law is
statute. The statutes are;
LAW
i. Sale of Goods Act, 1962 (Act 137).
ii. Hire Purchase Act, 1974 (NRCD 292).
iii. Auctions Sales Act, 2006 (Act 716)
 It is instructive to state that Act 137 applies to
every contract for the sale of goods in Ghana
including contract for the sale of goods to
SCOPE government.
Section 80 of Act 137 states that the sale of
OF THE goods act is the primary source of law which
APPLICATION regulates contracts for the sale of goods in
Ghana.
OF THE However, customary law and common law
ACT 137 remain secondary sources so far as they do not
contradict the sale of goods Act.
According to section 79 of Act 137 it includes
contracts entered into by Ghana or on behalf of
Ghana.
 The Supreme Court has clarified the status of
the Sale of Goods Act in relation to the rules of
Common law and equity.
SCOPE In Andreas Bschor Gmbh & Co. Kg v. Birim
OF THE Wood Complex Ltd and Birim Timbers Ltd, the
Court stated that;
APPLICATION
“As we consider this appeal it bears reminding
OF THE ourselves that the Sale of Good Act, 1962 is the
ACT 137 main source of our law as far as contracts for the
Sale of Goods are concerned and that the rules
of the common law and equity are subservient
to the statutory provisions”.
DEFINITION Section 1 (1) of Act 137 defines Sales
OF A of Goods as;
CONTRACT “A contract whereby the seller agrees
FOR THE to transfer the property in goods to
SALE the buyer for a consideration called
OF the price consisting wholly or partly
GOODS of money”.
 Contract - all the essential elements of a
valid contract should be present.
THE KEY
The Seller - seller refers to the person
ELEMENT who sells a good or agrees to sell.
IN THE
The Buyer - Buyer is a person who buys
DEFINITION or agrees to buy goods.
NB: The buyer must be bound to buy and
the seller must be bound to sell.
  Transfer of property in goods - this is distinguished from
transfer of property as in the latter no title is passed on to
the buyer. Transfer of property is defined in section 81 as the
general property in the goods and not merely as a special
THE KEY property- see the case of Rowland v. Divall.
 Price must consist wholly or partly in money- the
ELEMENT consideration given for the good must be wholly or partly in
money this eliminates batter trade. Where the consideration
IN THE is partly in money it should be shown that money was an
integral part of the price and not added for the sake of
DEFINITION appearance.
See the case of Aldridge v. Johnson; the plaintiff made a deal
CON’T with knights to exchange 32 bullocks for 100 quarters of
barley. Value of bullocks-£192, barley-£215. Difference to be
paid in cash. Knights took delivery of bullocks.
Held- balance of £23 was agreed to be paid in cash. There
were two separate contracts of sale and so sale of goods
principles apply.
  The subject matter of the agreement must be
goods
THE KEY This is distinguished from other assets like land,
ELEMENT choses in action (actionable property such as
IN THE shares, intellectual property) good is defined in
section 81 as movable property of every
DEFINITION description including growing crops or plants
CON’T and other things attached to or forming part of
the land which are agreed to be severed before
the sale by or under a contract.
See the case of Halaby v. Wiredu
 THE KEY Section 1(4) of Act 137 states that a
contract for the sale of goods may be
ELEMENT absolute or conditional.
IN THE
DEFINITION It is absolute if it is intended to come
into effect immediately. It is
CON’T conditional if it is intended to come
into effect upon a condition.
 Section 2(1) of Act 137 states that the
capacity to buy is regulated by the general
THE KEY law on capacity to contract.
The general principles of immunity for
ELEMENT minors apply except in the case of
IN THE necessaries.
DEFINITION Necessaries is defined in section 2(3) of Act
137 as goods which are suitable to the
CON’T condition of the life of the person to whom
they are delivered and to his actual
requirements at the time of delivery.
See Nash v. Inman.
 THE KEY
Form of the contract of sale
ELEMENT
IN THE Section 3 of Act 137 states that a
DEFINITION contract may be in writing, may be
oral or both or may be inferred by the
CON’T conduct of the parties.
 The general position of the law on the form of a
contract is that a contract need not be in writing
except in certain cases. Section 11 of the
FORM Contract Act, 1960 (Act 25) states that;
OF THE “subject to this Act, and to any enactment, a
CONTRACT contract whether made before or after the
commencement of this Act, is not void or
OF SALE unenforceable by reason only that it is not in
writing or that there is no memorandum or note
to the contract in writing”.
 In Maimuna Adams v Ernest Adom &
Anor;
It was stated that “The oral agreement
between the Plaintiff and the 1st
Defendant amounts to a contract of sale
CASE within the meaning of section 1 of the Sale
of Goods Act, 1962, Act 137. Per the
provisions of section 8(1), the fundamental
obligation of the seller is to deliver those
specific goods to the buyer”.
 Section 6 of Act 137 – The Price
 When the price is stated in the contract that would
THE KEY be the price payable by the buyer for the goods.
 Where the parties agree on the manner in which
ELEMENT the price is to be determined it is binding on both
parties.
IN THE  Thirdly, where there is an established course of
DEFINITION dealing between parties the price which applied in
previous dealings would be used if the parties do
CON’T not indicate the price in a particular transaction.
 When the price cannot be determined by any of
the methods, the buyer of the goods would be
required to pay a reasonable price for them. See
Nanor v. Auto Parts.
 The Price
THE KEY  Where the parties have agreed for a third party
to do the valuation of the goods and the third
ELEMENT party is unable to do so the whole agreement
IN THE would be avoided.
DEFINITION  However if one party is preventing the other
CON’T from doing the evaluation, the innocent party
can bring an action to court for damage for
breach of implied promise not to prevent
valuation. See Kyenkyenhene v. Adu
 Section 81 of Act 137 states that;
“Goods means movable property of
DEFINITION every description and it includes
growing crops or plants and other and
OF
other things attached to and forming
GOODS part of the land which are agreed to
be severed before sale by or under
the contract of sale”
 In Lee v Griffin (1861-63) All ER 191,
The Plaintiff a dentist, was contracted by the
deceased to make him (the Deceased) artificial
teeth but before the plaintiff completed the
deceased had died.
CASES It was held that the contract between the
Plaintiff and a deceased was a sale of goods but
frustrated by the death of the deceased.
See also, Robinson v Graves (1935) 1 KB 579.
- Clay vYates.
 The most important distinguishing feature of
sale of goods is that there has to be a transfer of
all the rights in property in the goods in
exchange for a price.

NOTE Thus, where under a contract of sale the

property in the good is transfer from the seller to
the buyer the contract is known as sale.
Where under a contract of sale the transfer of
the property in the goods is to take place at a
future time or subject to some condition later to
be fulfilled, the contract is called an agreement
to sell.
 SALE A contract of sale of goods must be distinguished from
other transaction which are normally quite different but
OF which, in particular circumstances may closely resemble
GOODS such a contract. Such contract include;
IS  Barter or exchange
DISTINGUISHED  A gift
FROM  A contract of bailment
OTHER  A contract of Hire Purchase
TRANSACTION  Contract for the supply of service
 A contract of Agency
 TERMS Fundamental obligation
IMPLIED under section 49 of Act 137, when the
UNDER seller is in breach of a fundamental
THE SALE obligation the buyer is entitled to refuse
OF the goods, terminate the contract, fail to
GOODS pay the price and sue for damages for the
ACT breach under section 53 of Act 137
 It is a fundamental obligation for the seller
TERMS to deliver the goods in the case of specific
goods.
IMPLIED This means that delivery of other goods
INTO other than what was agreed upon would be a
breach of the seller’s fundamental obligation
THE SALE as per section 8(1) of Act 137.
OF This duty by the seller cannot be excluded
GOODS by any exclusion clause no matter how
widely drawn.
ACT See the case of Suisse Atlantique Societe
CON’T D'armement Maritime v. N.V. Rotterdamsche
Kolen Centrale.
 The buyer is not bound to accept delivery
by installments unless he has previously
TERMS agreed to do so as per section 24 of Act
IMPLIED 137.
INTO For unascertained goods the
THE SALE fundamental obligation of the seller is to
OF deliver goods which substantially
GOODS correspond to the description or the
sample by which they are sold.
ACT
That is the goods are so closely related to
CON’T the description that the deviation is
trivial. See Section 8(2) of Act 137
 Where the buyer enter into a contract with the
seller relying on the description given by the seller,
TERMS that is the contract of sale by description.
IMPLIED Varley v. Whip
INTO The plaintiff agreed to sell and the defendant agreed
to buy a reaping machine which the defendant had
THE SALE never seen. The plaintiff stated that the machine was
new to the previous owner and had been used to cut
OF only 50/60 acres. The machine was delivered and he
defendant wrote complaining that the machine did
GOODS not correspond with the plaintiff’s statement. The
ACT machine was returned.
Held the term sale of goods by description must apply
CON’T to all cases where the purchaser has never seen the
article sold but has bought by description.
 The term sale by description has been extended
to cover some specific goods especially if it is
TERMS the only use of the good in question.
IMPLIED Grant v. Australian Knitting Mills
INTO The appellant bought undergarments from the
THE SALE shop of the respondent. He contracted severe
dermatitis due to the improper condition of the
OF underwear.
GOODS Held, there was a sale by description even though
ACT the appellant was buying something displayed
before him on the counter, that article not being
CON’T sold merely as a specific thing, but as a thing
corresponding to a description
 There is an implied condition that the sale of goods by
TERMS description would correspond exactly with the description
by which they are sold per section 11 of Act 137.
IMPLIED Arcos v. Ronaasen
INTO The appellants was an English company and it had contracted
with the respondents for delivery of redwood and white wood
THE SALE of specified dimensions. The goods were shipped and the
respondent refused to accept the goods on grounds that the
OF goods were not in accordance with the terms of the contract.
Held, the conditions of a contract must be strictly performed.
GOODS If a condition is not performed the buyer has a right to reject.
A man may require goods for a particular and make this
ACT known o the seller. However there is no reason why he should
abandon that purpose and apply the goods to another
CON’T purpose. The buyers were therefore entitled to reject the
goods.
  It is a fundamental obligation of the buyer
TERMS to accept the goods and pay the price in
accordance with section 21 of Act 137.
IMPLIED  Unless agreed otherwise delivery is to be
INTO concurrent with payment as per section 22
of Act 137.
THE SALE
 Where the seller’s breach of condition is of
OF serious nature the buyer is entitled to reject
GOODS the goods and refuse to pay the price and
sue for damages under section 53 of Act 137.
ACT  If it is trivial, the buyer is not entitled to
CON’T reject the goods but he can sue for
damages.
 TERMS
IMPLIED
It is the duty of the seller to ensure that
INTO the goods are in existence at the time the
THE SALE contract was made as per section 9 of Act
OF 137.
GOODS See the case of Couturier v. Hastie.
ACT
CON’T
 TERMS
IMPLIED
There is an implied condition that
INTO
in a sale of goods by sample the
THE SALE
goods would correspond exactly
OF
with the sample by which they are
GOODS
sold per section 12 of Act 137.
ACT
CON’T
 Where the goods are of a description which are
TERMS supplied by the seller in the course of his
business and the buyer expressly or by
IMPLIED implication makes known the purpose for which
INTO the goods are required there is an implied
condition that the goods are reasonably fit for
THE SALE that purpose.
OF Ashington Piggeries Ltd v. Christopher Hill,
The seller cannot exclude this duty unless it is
GOODS proved that before the contract was made the
ACT exclusion clause was brought to the notice of the
buyer and its effect made clear to him. This also
CON’T applies to the containers in which the goods are
kept in.
 TERMS
Where the buyer intends to use the goods
IMPLIED for an uncommon purpose or where
INTO special circumstances exist in respect to
THE SALE the buyer’s use of the goods the implied
OF condition will apply only if the buyer
expressly informed the seller of this
GOODS special circumstances or uncommon use.
ACT See Ingham v. Emes
CON’T
 There is an implied condition that in every contract of
sale of goods the goods would be free from defects
TERMS which are not declared or known to the buyer before or
IMPLIED at the time when the contract was made as per section
13(1)(a).
INTO Exception 1- where the buyer has examined the good
THE SALE in respect of defects which should have been revealed
by examination per section 13(1)(a)(i) Buyer would be
OF deemed to have examined the good if given opportunity
GOODS by the seller to inspect or examine them. This is so even
if he performs an incomplete examination or fails to
ACT examine at all.
CON’T See - Thornett v. Beers & Sons
- Wren v. Holt.
 TERMS
IMPLIED Exception 2- where the goods are sold by sample there
is no implied condition that the goods are free from
INTO undisclosed defects if the defects could have been
discovered by a reasonable examination of the sample.
THE SALE Reasonable examination refers to how an average,
OF reasonable buyer of the class to which he belongs would
have examined the goods. The defects also should not
GOODS be latent.
ACT See Godley v. Perry.
CON’T
 Exception 3 - Goods not sold in the seller’s ordinary course of
business. See Rockson v. Armah.
TERMS The appellant was the owner of a car of which he sold to the
respondent. It showed signs of being involved in an accident. This
IMPLIED fact was relayed to the appellant who took it to a wayside fitter to
fix.
INTO The car was delivered to the respondent who accepted it used it for
THE SALE two months and attempted to repudiate the contract by stopping
payment of his final post-dates check on the grounds that he had
OF discovered latent defects.
Held- the seller was a non-dealer and was not aware and could not
GOODS reasonably have been aware of the defects.
ACT  The seller does not sell those kind of goods in his ordinary course
of business
CON’T  Was not aware of the defects in the goods
 Could not reasonably been aware of the defects in the goods
 Geddling v. Marsh
TERMS The plaintiff sold mineral water which she obtained
IMPLIED supply from the defendant. while the plaintiff was
putting back the lime juice and soda in the cradle it
INTO burst in her hands and seriously injured her. The
plaintiff had made known to the defendant the
THE SALE purpose for which she required the bottles of
mineral water.
OF Held- even if the bottles containing the mineral
water were not sold but hired by the defendant to
GOODS the plaintiff, they were nevertheless supplied under
a contract of sale and therefore there was an implied
ACT condition as well that their contents should be
reasonably fit for the purpose for which they are
CON’T required by the plaintiff.
  The seller is to deliver the goods at the time
TERMS stipulated in the contract or within a reasonable
time per section 16(2) Act 137.
IMPLIED  There is an implied condition under section 20 (1)
INTO of Act 137, in situation where delivery to the buyer
would be done through a carrier, it is the duty of
THE SALE the seller to contract with the carrier on behalf of
the buyer as may be reasonable having regard to
OF all the circumstances of the case.
GOODS  This maybe to ensure that there is safe delivery of
the goods to the buyer or adequate compensation
ACT to the buyer in the event of loss or destruction of
CON’T the goods in transit.
See Clarke v. Hutchins.
 Unless otherwise agreed where goods are sent by the
TERMS seller to the buyer by a route involving sea or air transit
IMPLIED in circumstances in which it is usual to insure, the seller
must give such notice (if any) as may be required by the
INTO buyer to enable him to insure them during the sea or air
transit, and if the seller fails to do so the goods shall be
THE SALE at his risk during such transit. See section 20 (2) of Act
OF 137.

GOODS It is instructive to
reasonable contract
state that, the duty to make a
of carriage do not carry with it the
ACT duty to insure the goods during transit. Unless the
parties so agree or it was customary for the seller to
CON’T assume such a duty.
  Warranties- when the seller breaches a warranty the
buyer is only entitled to damages.
TERMS
 There is an implied warranty that he will have the
IMPLIED right to sell the goods at the time when the property
INTO or ownership of the goods is to pass to the buyer.
See Niblett v. Confectioner’s Materials Co
THE SALE  Unless otherwise agreed stipulations as to the time
OF of payment or as to the time for accepting delivery
are not conditions of a contract of sale per section
GOODS 23.
ACT  They are warranties. It is only when the buyer’s
persistent failure to pay the price manifests or indicates
CON’T a clear intention to repudiate the contract that the
seller would be entitled to terminate the contract.
END THANK YOU