1

CHAPTER II

Contract of Export Sale

The export contract is used for the international sale of certain products (industrial

supplies, raw materials, manufactured goods), which are projected for resale, where the

buyer is a trader, importer, distributor or wholesaler that will sell the products to another

company or merchant. Though it is common practice to export products based a proforma

invoice or quotation received from exporters, it is a safe practice to use written and

legal export contracts. Some of the essential elements of an export contract are:

 Products, standards and specifications.

 Units of measure in both figures and words.

 Total value. The total contract value in words and figures, and in a

specific currency.

 Terms of delivery; delivery terms, based on the Incoterms. 1

 Terms of payment; amount, mode and currency.

 Documentary requirements; documents needed for international trade

transactions.

 Delay in delivery; damages due to the importer from the exporter in the event of

late delivery owing to reasons other than force majeure.

 A contract should provide for the insurance of goods against loss, damage or

destruction during transportation.

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 Force majeure; provisions in the contract defining circumstances that would

relieve partners of their liability for non-performance of the contract.

 Applicable law; the law of the country that is to govern the contract.

 Arbitration clause to facilitate amicable and quick settlement of disputes or

differences that may arise between the parties. 2

raw materials

manufactured goods

resale

merchant

quotation

amicable

All export transactions are made through Export Sales Contracts. Exports Sales

Contract or Export Contract may be defined as a contract whereby the exporter (seller)

transfers or agrees to transfer the property in goods to the importer (buyer) for a price.

From this definition the following essentials of Export Sales Contracts emerge:

Two Parties: There must be at least two parties. An export has to be lateral because the

property in goods has to pass from one person to another. The exporter and the importer

must be different persons. A person cannot buy his own goods.

Goods: The subject-matter of Export Sales Contracts must necessarily be goods; i.e.,

movables. Goods may be existing goods or future goods.

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Transfer or Agreement to Transfer: In an Export Sales Contract it is the ownership that is

transferred or agreed to be transferred. Transfer of more possession of goods is not

covered by Export Sales Contract.

Movables

future goods

possession

Price: Price is the considerations of Export Sales Contract. If goods are offered as the

consideration for goods, it will not amount to sale; it will be called barter. Further, in case

there is no consideration it amounts to gift. However, if goods are sold for a definite sum

and the price is partly paid in terms of valued up of goods and partly in cash that is export

(sale).

Essentials of a Valid Contract: Exports Sales Contract should have all other essentials of a

valid contract as per the general law of contract. These essentials include capacity of

parties to contract, free consent legal object etc. 3

Consideration

Barter

Valid Contract

2.1 Contract of Sale of Goods

A typical trade transaction starts with a contract of sale. A seller and a buyer agree

a price for a specified quantity and type of goods to be purchased under specified terms

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and conditions. From the buyer’s point of view the legal objective of such a contract is to

obtain ownership of the goods and from the seller’s to receive the price. Thus the essence

of the contract is the transfer of property in goods for financial consideration.

Like any other contract, a contract of sale depends on an agreement- between the

seller and the buyer- which is usually shown by the acceptance of an offer. 4

typical

financial

depends on

acceptance

an offer

Sale of goods is the most common of all commercial contracts. 5An international

sale of contract, like any other contract, is governed by a particular national law. That

system of law will govern the contract whatever it is to be performed and has been

traditionally referred to as a the proper law of the contract. A Court will determine which

national law is to govern the contract by applying its rules of private international law. 6

In the U.S., the Uniform Commercial Code (UCC) has been adopted in all 50 states.

In UK, the English law relating to the sale of goods is to be applied to the contract of sale

and the English law relating to the sale of goods is to be found primarily in the Sale of

Goods Act, 1979. In Myanmar, the law relating to the sale of goods was originally a part of

the India Contract Act in 1930. (Indian Act IX, 1872) The law as defined and amendment

4
United Nations Conference on Trade and Development, Legal Aspects of International Trade, 1999, p.1
5
Parul Gupta, Legal Aspects of Business, 2018, p.163
6
Pamela Sellman, Law of International Trade Textbook, 6 th edition, 1995, pp.1-2
 5

and enacted into a separate Act called the Sale of Goods Act, (Myanmar Code X, 1872)

which entered into force in Myanmar since 1st July 1930. (The Sale of Goods Act, 1930) So,

each country has their respective Sale laws.

applied

amendment

enacted

Sale of Goods Act

Contracts of sale are governed by either national law-the law of the domicile of the seller

or the buyer- or by an international treaty, the United Nations Convention on the Contracts

for the International Sale of Goods (CISG), 7entered into force in 1 January 1988. 8

A contract of sale is a formal contract which contains all terms and conditions in the

written form related to a sale. This contract states the agreement between a seller to sell

and buyer to buy at an agreed price.9

domicile

agreed price

Contracts for the International Sale of Goods

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 price. There may be a contract of sale between

7
United Nations Conference on Trade and Development, Legal Aspects of International Trade, 1999, p.3
8
Franco Ferrari, The CISG and its impact on National Legal System, 2008, p.33
9
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one part-owner and another. 10 A contract of sale may be absolute or conditional. 11 Where

under a contract of sale the property in the goods is transferred from the seller to the

buyer, the contract is called a sale, but where the transfer of the property in the goods is to

take place at a future time or subject to some condition thereafter to be fulfilled, the

contract is called an agreement to sell.12 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. 13

fulfilled

elapses

transferred

2.2 Formation of the Contract

A contract of sale of goods is a contract by which the seller transfers or agrees to

transfer the property in goods to the buyer for a money consideration, called the price. 14

There may be a contract of sale between one part owner and another. 15A contract of sale

may be absolute or conditional. 16 Where under a contract of sale the property in the goods

is transferred from the seller to the buyer the contract is called a sale. 17

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

10
Section 4(1) of the Myanmar Sale of Goods Act 1930
11
Section 4(2) of the Myanmar Sale of Goods Act 1930
12
Section 4(3) of the Myanmar Sale of Goods Act 1930
13
Section 4(4) of the Myanmar Sale of Goods Act 1930
14
Section 2(1) of the UK Sale of Goods Act 1979 and the Carriage of Goods by Sea in Myanmar 1872
15
Section 2(2) of the UK Sale of Goods Act 1979 and the Carriage of Goods by Sea in Myanmar 1872
16
Section 2(3) of the UK Sale of Goods Act 1979 and the Carriage of Goods by Sea in Myanmar 1872
17
Section 2(4) of the UK Sale of Goods Act 1979 and the Carriage of Goods by Sea in Myanmar 1872
 7

called an agreement to sell. 18An 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. 19

Illustrations

(a) A promises to deliver goods to B on a certain day on payment of Taka 1,000. A dies

before that day, A's representatives are bound to deliver the goods to B, and B is bound to

pay the Taka 1,000 to A's representatives.

(b) A promises to paint a picture for B by a certain day, at a certain price. A dies before the

day, the contract cannot be enforced either by A's representatives or by B. 20

“Carriage of goods” covers the period from the time when the goods are loaded on

to the time they are discharged from the ship. 21

bound to

certain price

loaded

discharged

2.3 Formalities of the Contract

A contract of sale is made by an offer to buy or sell goods for a price and the

acceptance of such offer. The contract may provide for the immediate delivery of the goods

or immediate payment of the price or both, or for the delivery or payment by instatement

18
Section 2(5) of the UK Sale of Goods Act 1979 and the Carriage of Goods by Sea in Myanmar 1872
19
Section 2(6) of the UK Sale of Goods Act 1979 and the Carriage of Goods by Sea in Myanmar 1872
20
Section 2(6) of the Carriage of Goods by Sea in Myanmar 1872
21
Article 1(e ) of the Hague-Visby Rules - The Hague Rules as Amended by the Brussels Protocol 1968
 8

or that the delivery or payment or both shall be postponed. 22 Subject to the provisions of

any law for the time being in force, a contract of sale may be made in writing or by word of

mouth, or party in writing and partly by word of mouth, or may be implied from the

conduct of the parties.23

formalities of the Contract

postponed

2.4 Subject-matter of Contract

The goods which form the subject of a contract of sale may be either existing goods,

owned or possessed by the seller, or future goods.24 There may be a contract for the sale of

goods the acquisition of which by the seller depends upon a contingency which may or

may not happen.25 Where by a contract of sale the seller purports to effect a present sale

of future goods, the contract operates as an agreement to sell the goods. 26

acquisition

contingency

purports

Where there is a contract for the sale of specific goods, the contract is void if the

goods without the knowledge of the seller have at the time when the contract was made,

perished or become so damaged as no longer to answer to their description in the

contract. 27

22
Section 5(1) of the Myanmar Sale of Goods Act 1930
23
Section 5 (2) of the Myanmar Sale of Goods Act 1930
24
Section 6 (1) of the Myanmar Sale of Goods Act 1930
25
Section 6 (2) of the Myanmar Sale of Goods Act 1930
26
Section 6 (3) of the Myanmar Sale of Goods Act 1930
27
Section 7 of the Myanmar Sale of Goods Act 1930
 9

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 or become so damaged as no

longer to answer to their description in the agreement before the risk passes to the buyer,

the agreement is thereby avoided. 28

void

perished

damaged

description

demand

(i) Definitions of goods

Goods are “physical, produced objects for which a demand exists, over which ownership

rights can be established and whose ownership can be transferred from one institutional

unit to another by engaging in transactions on markets.” 29

“Goods” means every king of moveable property other than actionable claims and

money; and includes stocks and shares, growing crops, grass, and things attached to or

forming part of the land which are agreed to be severed before sale or under the contract

of sale. 30

“Goods” includes all personal chattels other than things in action and money, and

in Scotland all corporeal movables except money; and in particular “goods” includes

emblements, industrial growing crops, and things attached to or forming part of the land

28
Section 8 of the Myanmar Sale of Goods Act 1930
29
United Nations, Department of Economic and Social Affairs, International Merchandise Trade Statistics:
Concepts and Definitions 2010, 2011, p.77.
30
Section 2 (7) of the Myanmar Sale of Goods Act 1930
 10

which are agreed to be severed before sale or under the contract of sale; and includes an

undivided share in goods. 31

chattels

emblements

(ii) Types of Goods

“Existing goods” are goods that are either owned or possessed by the seller. 32

“Future goods” are goods to be manufactured or acquired by the seller after the
33
making of the contract of sale. The goods which form the subject of a contract of sale

may be either existing goods, owned or possessed by the seller, or goods to be

manufactured or acquired by him after the making of the contract of sale, in the Sale of
34
Goods Act called future goods. There may be a contract for the sale of goods the

acquisition of which by the seller depends on a contingency which may or may not

happen. 35Where by a contract of sale the seller purports to affect a present sale of future

goods, the contract operates as an agreement to sell the goods. 36 “Specific goods” means

goods identified and agreed on at the time a contract of sale is made and includes an

undivided share, specified as a fraction or percentage, of goods identified and agreed on as

aforesaid. 37

fraction

aforesaid

31
Section 61 (1) of the Sale of Goods Act 1979 in UK
32
Section 5(1) of the Sale of Goods Act 1979 in UK
33
Section 5(1) and 61(1) of the Sale of Goods Act 1979 in UK
34
Section 5(1) of the Sale of Goods Act 1979 in UK and Section 6(1) of the Myanmar Sale of Goods Act 1930
35
Section 5(2) of the Sale of Goods Act 1979 in UK and Section 6(2) of the Myanmar Sale of Goods Act 1930
36
Section 5(3) of the Sale of Goods Act 1979 in UK and Section 6(3) of the Myanmar Sale of Goods Act 1930
37
Section 61(1) of the Sale of Goods Act 1979 in UK
 11

“Unascertained goods” are goods that are agreed upon at the point of making the

contract of sale but are not specifically identified in the contract. For example, a seller may

agree to sell a buyer one out of a number of items of the same type (e.g., bags of sugar)

without defining which specific item the buyer will receive. As soon as the specific item is

defined, for example when being prepared for delivery, this becomes specific, or

ascertained goods. 38

Where there is a contract for the sale of unascertained goods no property in the

goods is transferred to the buyer unless and until the goods are ascertained. 39

ascertained goods

(iii) Price

The price in a contract of sale may be fixed by the contract or may be left to be

fixed in manner thereby agreed or may be determined by the course of dealing between
40
the parties. Where the price is not determined in accordance with the foregoing

provisions, the buyer shall pay the seller a reasonable price. What is a reasonable price is a

question of fact dependent on the circumstances of each particular case. 41

Where there is an agreement to sell goods on the terms that the price is to be fixed

by the valuation of a third party cannot or does not make such valuation, the agreement is

thereby avoided. Provided if the goods or any part thereof have been delivered to and
42
appropriated by the buyer, he shall pay a reasonable price therefore. Where such third

party is prevented from making the valuation by the fault of the seller or buyer, the party

not in fault may maintain a suit for damages against the party in fault. 43

38
Section 61(1) of the Sale of Goods Act 1979 in UK
39
Section 16 of the Sale of Goods Act 1979 in UK and Section 18 of the Myanmar Sale of Goods Act 1930
40
Section 9(1) of the Myanmar Sale of Goods Act 1930
41
https://www.upcounsel.com/classification-of-goods-in-business-law
42
Section 10(1) of the Myanmar Sale of Goods Act 1930
43
Section 10(2) of the Myanmar Sale of Goods Act 1930
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fixed

determined

reasonable price

valuation

fault

maintain

2.5 Contractual Terms

A contractual term can be defined as ‘Any provision forming part of a contract’. 44

45
The terms of the contract set out the obligations on the parties under the agreement.

The terms of a contract can be divided into express terms and implied terms as basic types

of terms.

2.5.1 Basic types of terms

(1) Express terms

46
Express terms are ones that the parties have set out in their agreement. A

contract may be agreed upon either orally or in writing, or both. 47

(2) Implied terms

As well as the express terms laid down by the parties, implied terms may in some

circumstances be read into contracts by the courts. 48 It is extremely common for terms to

44
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45
Catherine Elliott & Frances Quinn, contract of law, 7 th edition, 2009, p.121.
46
Allen & Overy, Basic Principles of English Contract Law, 2016, pp-4,5.
47
Paul Richards, Law of Contract,13th edition, 2017, p.140.
48
Catherine Elliott & Frances Quinn, contract of law, 7th edition, 2009, p.131.
 13

be implied into a contract, sometimes as a result of statute, other times by the courts. 49 A

contract may contain terms which are not expressly stated but which are implied, either

50
because the parties intended this, or by operation of law, or by custom or usage. The

express terms and any implied terms together create the legally binding obligations on the

51
parties. There are three main types of implied terms: implied term by Court, implied

terms by Statute and implied terms by custom.

laid down

statute

2.5.1.1 Terms Implied by the Court

The Court can imply terms into a contract in 2 ways: in law, and in fact.

Terms implied in law

If the Court implies a term in law into a particular contract, then that term will also be

implied into all other (existing and future) contracts of the same type. The Court does this

as a matter of reasonableness and public policy.

Terms implied in fact

The Court can also imply terms into a contract, based on the facts of a particular case,

to reflect the parties’ intentions for their contractual relationship (even if these intentions

had not been made explicit). 52

explicit

49
Janet O’ Sullivan & Jonathan Hilliard, The Law of Contract, 5 th edition, 2012,p.167 .
50
Janet O’ Sullivan & Jonathan Hilliard, The Law of Contract, 5th edition, 2012,p.167 .
51
Allen & Overy, Basic Principles of English Contract Law, 2016, pp-4,5.
52
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reasonableness

2.5.1.2 Implied Terms by Statute

(i) Implied terms about title

In a contract of sale... there is an implied term on the part of the seller that in the

case of a sale he has a right to sell the goods, and in the case of an agreement to sell he

53
will have such a right at the time when the property is to pass. This Section does not

require that the seller be the owner of the goods sold, but only that he has the right to sell.

So, for instance an agent is empowered to sell goods which belong to his principal, on his

principal’s behalf.

Conversely there may be a breach of Section 12 of the Sale of Goods Act 1979 in UK

where a person sells goods which he does own if they infringe someone’s intellectual

property right. This is what happened in Niblett V Confectioners’ materials Co.Ltd (1921) 3

KB 387, where the defendant, an American company, sold 3,000 tins of condensed milk to

the plaintiffs, but when the goods arrived in England, customs officials seized the goods on

the grounds that the labels infringed a well-known company’s trademark. It was held that

as the trademark owner could have obtained an injunction to restrain the sale of the

goods, the sellers had no right to sell them. 54

empowered

conversely

53
Section 12(1) of the Sale of Goods Act 1979 in UK
54
Robert Bradgate and Fidelma White, Commercial Law; Legal Practice Course Guides, 2007, p.145.
 15

infringe

seized

restrain

Since the implied term in Section 12(1) of the UK Sale of Goods Act 1979 is a

condition, breach allows the buyer to reject the goods and terminate the contract.

However, it has been held that the rule that the buyer loses the right to reject goods for

breach of condition if he has accepted them does not apply where there is a breach of

Section 12, on the grounds that breach of Section 12 gives rise to a total failure of

consideration entitling the buyer to a refund of any money paid for the goods. This

anomalous rule is a result of the case of Rowland V Divall (1923) 2 KB 500. There the

plaintiff bought a car from the defendant for £334 and resold it for £400 to a sub-buyer,

55
who used it for four months. It turned out that the car had never belonged to the

defendant because he bought it in good faith from someone without title. The car was

reclaimed by its original owner and the plaintiff refunded the sub-buyer £400 and then

claimed from the defendant £334 on the basis that there had been a total failure of

consideration due to the breach of the condition. The defendant admitted liability for

breach, but argued that there was not a total failure of consideration as the plaintiff and

the sub-buyer had had four month’s use of the car. The Court of Appeal found that there

55
Robert Bradgate and Fidelma White, Commercial Law; Legal Practice Course Guides, 2007, p.146.
 16

was a total failure of consideration and allowed him a total refund; the breach was so

fundamental that the plaintiff could not have accepted the goods. 56

allows

reject

terminate

anomalous

reclaimed

In a contract of sale... there is also an implied term that the goods are free, and will

remain free until the time when the property is to pass, from any charge or encumbrance

not disclosed or known to the buyer before the contract is made, and57 the buyer will enjoy

quiet possession of the goods except so far as it may be disturbed by the owner of or other

person entitled to the benefit of any charge or encumbrance so disclosed or known.58

In a contract of sale… there is an implied warranty that-

(a) the goods are free and will remain free until the time when the property is to pass,

from any charge or encumbrance not disclosed or known to the buyer before the

contract of sale.

This appears to add little to Section 12(1), as the law does not recognize real

encumbrances over chattels by someone not in possession of them, and even equitable

rights must give way to a bona fide purchaser without notice. The measure of damages for

56
Robert Bradgate and Fidelma White, Commercial Law; Legal Practice Course Guides, 2007, p.146.
57
Section 12(2)(a) of the Sale of Goods Act 1979 in UK
58
Section 12(2)(b) of the Sale of Goods Act 1979 in UK
 17

a breach of this warranty would usually be the amount it takes to discharge the charge or

encumbrance.

encumbrance

disclosed

disturbed

equitable

bona fide purchaser

Section 12(2) also provides:

In a contract of sale … there is also an implied warranty that-

(b) the buyer will enjoy quiet possession of the goods except so far as it may be

disturbed by the owner or other person entitled to the benefit of any charge or

encumbrance so disclosed or known.

It appears that this warranty will be breached if the buyer is disturbed by the wrongful

act of the seller or by any person claiming through him, or by a lawful act of any other 59

person, including the true but disposed owner: Mason V Burningham (1949) 2 KB 545.

In Mason V Burningham 60, the plaintiff bought a typewriter from the defendant

which had been obtained by theft. He later had to return it to the initial owner.

The Court held that there was a breach of this Section, as it was lawful for the

previous owner to seek to recover it. For example, in Rubicon Computer Systems

59
Robert Bradgate and Fidelma White, Commercial Law; Legal Practice Course Guides, 2007, p.147.
60
(1949) 2 KB 545
 18

Ltd V United Paints Ltd (2000) 2 TCLR 453, there was a contract to supply a

computer system. Following installation and part payment a dispute arose. The

supplier had installed a ‘time-lock’, which when activated rendered the system

unusable. It was held, inter alia , that the supplier’s installation of the ‘time -lock’

constituted wrongful interference with the goods and accordingly there was a

breach of Section 12(2) (b).

initial owner

rendered

unusable

interference

The Section imposes a continuing warranty, so that it was breached in

Microbeads AG V Vinhurst Road Markings Ltd (1975) 1 All ER 529, where the Court

of Appeal awarded damages under Section 12(2) to a buyer whose quiet

possession was disturbed by a patentee who had been granted a patent after the

sale, so there was no breach of Section 12(1). 61

(ii) Sale by description

Where there is a contract for the sale of goods by description, there is an

implied term that the goods will correspond with the description. 62 If the sale is by sample

as well as by description it is not sufficient that the bulk of the goods correspond with the

61
Robert Bradgate and Fidelma White, Commercial Law; Legal Practice Course Guides, 2007, p.147.
62
Section 13(1) of the Sale of Goods Act 1979 in UK
 19

sample if the goods do not also correspond with the description. 63 In Re Moore & Co.Ltd

and Landauer & Co.Ltd (1921) 2 KB 519 case, a statement in a contract for the sale of 3,000

tins of fruit that the tins should be packed in cases of 30 tins; there was therefore a breach

when the seller delivered the full quantity of tins but some were packed in cases of 24 tins,

so that the buyer could reject the goods for the breach of Section 13 of the Sale of Goods

Act, 1979. 64

patentee

granted

correspond

sufficient

(iii) Implied terms about quality or fitness

Where the seller sells goods in the course of a business, there is an implied term
65
that the goods supplied under the contract are of satisfactory quality. For example, A

purchases a hot water bottle from a chemist. The bottle burst and injured A’s wife. A breach of

condition as to the fitness was thus committed. Hence A is liable for a refund of the price and

also the damages. 66

In the past, the Courts were reluctant to find that the goods were of

unmerchantable quality, so as to allow the buyer to reject them, where the defect was

minor. For instance, in Cehave NV V Bremer Handelsgesellschaft mbH (1976) QB 44, it was

found that a cargo of citrus cattle food pellets which was overheated was ‘far from perfect’

63
Section 13(1A)(2) of the Sale of Goods Act 1979 in UK
64
Robert Bradgate and Fidelma White, Commercial Law; Legal Practice Course Guides, 2007, p.149.
65
Section 14(1) of the Sale of Goods Act 1979 in UK
66
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 20

but the Court found that the goods were merchantable as they could still be used for the

buyer’s purpose. 67

satisfactory quality

chemist

burst

injured

fitness

refund

unmerchantable

reluctant

defect

merchantable

(iv) Sale by sample

In the case of a contract for sale by sample there is an implied term (a) that the

bulk will correspond with the sample in quality; (c) that the goods will be free from any

defect, making their quality unsatisfactory, which would not be apparent on reasonable

examination of the sample. 68 For example, a company sells certain belts made up of a special

material by sample for the Indian Army. The belts are found to be made up of plastic of

67
Robert Bradgate and Fidelma White, Commercial Law; Legal Practice Course Guides, 2007, p.153.
68
Section 15(2) of the Sale of Goods Act 1979 in UK
 21

cheaper quality, not discoverable by ordinary inspection. In this case, the buyer is entitled to

the refund of the price plus damages. 69

belts

discoverable

inspection

Different terms in a contract (both express and implied) will clearly vary in

their level of importance. For example, if I offer to sell you my car with the engine in good

condition, the paintwork unscratched and the ashtrays empty, clearly the first two terms

are of rather more importance to you than the last, and my breaching that term will cause

you less of a problem than violation of either of the others. Consequently, the law seeks to

classify terms according to their importance, with the implications of a breach for the

innocent party varying according to the type of term breached.

ashtrays

paintwork

implications

innocent

2.5.1.3 Terms Implied by Custom

Terms may be implied by the custom, usage or practice of a particular trade,

market or area in which the contract is made. Terms may also be implied from the parties’

previous courses of dealing with each other. 70

69
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70
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 22

2.5.2 Relative significance of terms

For these purposes, there are three types contractual term: conditions, warranties,

and innominate terms as relative significance of terms. 71

significance / /

innominate

warranties

(i) Conditions and Warranties

Unless a different intention appears from the terms of the contract stipulations as

to time of payment are not deemed to be of the essence of a contract of sale. Whether any

other stipulation as to time which is of the essence of the contract or not depends on the

terms of the contract. 72

A stipulation in a contract of sale with reference to goods which are the subject

thereof may be a condition or warranty. 73

intention

stipulations

essence

appear

71
Catherine Elliott & Frances Quinn, contract of law, 7th edition, 2009, p.137.
72
Section 11 of the Myanmar Sale of Goods Act 1930
73
Section 12(1) of the Myanmar Sale of Goods Act 1930
 23

A condition is a stipulation essential to the main purpose of the contract, the breach

of which gives rise to a right to treat the contract as repudiated. 74

In Baldry v. Marshall case, Baldry consulted the car dealer, and told him that he

wanted to purchase a car for the purpose of touring. The Car dealer Mr. Marshall

suggested that a Bugati car would be fit for the purpose. Baldry bought the car as he

believed the car dealer. However the car was found to be unsuitable for touring purposes.

The Court ruled that the suitability of the car for the purpose of touring was a condition

because that was the very purpose for which Baldry has purchased it. Thus, Baldry could

return the car to the dealer and receive the refund for the same. 75

repudiated

consulted

car dealer

touring

suggested

unsuitable

receive

A warranty is a stipulation in a contract of sale is a condition or a warranty depends

in each case on the construction of the contract, the breach of which gives rise to a claim

for damages but not to a right to reject the goods and treat the contract as repudiated. 76

74
Section 12(2) of the Myanmar Sale of Goods Act 1930
75
Baldrey v. Marshall (1925) 1. KB 260
76
Section 12(3) of the Myanmar Sale of Goods Act 1930
 24

Whether a stipulation in a contract of sale is a condition or a warranty depends in

each case on the construction of the contract. A stipulation may be a condition though

called a warranty in the contract. 77

Where a contract of sale is subject to any condition to be fulfilled by the seller, the

buyer may waive78 the condition or elect to treat the breach of the condition as a breach of

warranty and not as a ground for treating the contract as repudiated.

Where a contract of sale is not severable and the buyer has accepted the goods or

part thereof or where the contract is for specific goods the property in which has passed to

the buyer, the breach of any condition to be fulfilled by the seller can only be treated as a

breach of warranty and not as a ground for rejecting the goods and treating the contract

as repudiated unless there is a term of the contract express or implied to that effect. 79

Nothing in this section shall affect the case of any condition or warranty fulfillment

of which is excused by law by reason of impossibility or otherwise. 80

In a contract of sale, unless the circumstances of the contract are such as to show a

different intention, there is- (a) an implied condition on the part of the seller that, in the

case of a sale, he has a right to sell the goods and that in the case of an agreement to sell,

he will have a right to sell the goods at the time when the property is to pass; (b) an

implied warranty that the buyer shall have and enjoy quiet possession of the goods; and

(c) 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. 81

77
Section 12(4) of the Myanmar Sale of Goods Act 1930
78
Section 13(1) of the Myanmar Sale of Goods Act 1930
79
Section 13(2) of the Myanmar Sale of Goods Act 1930
80
Section 13(3) of the Myanmar Sale of Goods Act 1930
81
Section 14 of the Myanmar Sale of Goods Act 1930
 25

warranty

contract of sale

construction of the contract

damages

reject

waive /

passed

term

express

implied

charge

Where 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

if the goods do not also correspond with the description. 82

Subject to the provision of this Act and of any other law for the time being in force,

there is no implied warranty or condition as to the quality or fitness for any particular

purpose of goods supplied under a contract of sale, except as follows:-

Where 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 he is the manufacturer or producer or not), there is

an implied condition that the goods shall be reasonably fit for such purpose: Provided that,

82
Section 15 of the Myanmar Sale of Goods Act 1930
 26

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. 83

Where goods are bought by description from the seller who deals in goods of that

description (whether he is the manufacturer or producer or not), there is an implied

condition that the goods shall be of merchantable quality; Provided that, if the buyer has

examined the goods, there shall be no implied condition as regards defects which such

examination ought to have revealed. 84

An implied warranty or condition as to quality or fitness for a particular purpose

may be annexed by the usage of trade. 85

An express warranty or condition does not negative a warranty or condition implied

by this Act unless inconsistent therewith. 86

A contract of sale is a contract for sale by sample where there is a term in the

contract, express or implied to that effect. 87

In the case of a contract for sale by sample there is an implied condition-

(a) that the bulk shall correspond with the sample in quality; (b) that the buyer shall have

a reasonable opportunity of comparing the bulk with the sample: and (c) that the goods

shall be free from any defect, rendering them un merchantable, which would not be

apparent on reasonable examination of the sample. 88

description

sample

quality

83
Section 16(1) of the Myanmar Sale of Goods Act 1930
84
Section 16(2) of the Myanmar Sale of Goods Act 1930
85
Section 16(3) of the Myanmar Sale of Goods Act 1930
86
Section 16(4) of the Myanmar Sale of Goods Act 1930
87
Section 17(1) of the Myanmar Sale of Goods Act 1930
88
Section 17(2) of the Myanmar Sale of Goods Act 1930
 27

fitness

skill or judgment ( )

supply ( / )

patent

trade name

merchantable

revealed

annexed

defect

Innominate Terms

Also known as ‘intermediate terms’, these are terms which can be broken with

either important or trivial consequences, depending on the nature of the breach. If the

effects of the breach are serious, the term will act as a condition; if they are minor, it acts

as a warranty. 89

Innominate terms were first described in Hong Kong Fir Shipping Co Ltd v Kawasaki

Ltd (1962), in which the defendants had chartered a ship from the plaintiffs for two years.

Elderly engines and an inadequate and incompetent staff resulted in a total of 20 weeks of

the charter being lost to breakdowns and repairs. The agreement contained a clause

stating that the ship was ‘in every way fitted for ordinary cargo service’, so there was no

doubt that the defendants were entitled to bring an action for damages for breach of

contract, but instead of doing so, they decided to terminate the contract.

The plaintiffs then brought an action for wrongful repudiation, claiming that their

breach did not entitle the defendants to terminate, only to claim damages. The Court of

89
Catherine Elliott & Frances Quinn, contract of law, 7th edition, 2009, p.138.
 28

Appeal agreed, stating that the question to be asked was whether the result of the breach

had been to deprive the defendants of the whole of the benefit to which they were entitled

under the contract. As this was not the case, the breach did not justify termination.

The real importance of the case is in the Court of Appeal’s statement that some

terms, and this was one of them, did not lend themselves to the traditional form of legal

analysis: they could not be clearly defined before breach as conditions or warranties. Lord

Diplock stated: the problem in this case is, in my view, neither solved nor soluble by

debating whether the ship owner’s express or implied undertaking to tender a seaworthy

ship is a ‘condition’ or ‘warranty’. The correct approach was to look at what had happened

as a result of the breach and then decide if the charterers had been deprived of

substantially the whole benefit which it was the intention of the parties they should obtain.

In other words, there were terms where the effect of a breach should depend on the

importance of that breach. The term as to seaworthiness was such a term, because it could

be broken in many different ways, with different levels of seriousness. 90

Innominate Terms /

trivial

chartered

breakdowns

repair

terminate / /

90
Catherine Elliott & Frances Quinn, contract of law, 7th edition, 2009, p.139.
 29

deprive /

justify

seaworthy

2.6 Performance of the Contract

In a contract for sale both the buyers and the sellers have their respective parts to

perform. After the formation of a valid contract of sale, the next stage is its performance.

The performance of a contract of sale may be defined as the performance of the respective

duties of the seller and buyer as per the terms of the contract. The term “Performance of

contract” means that both, the promisor and the promisee have fulfilled their respective

obligations, which the contract placed upon them. For instance, A visits stationery shop to

buy a calculator. The shopkeeper delivers the calculator and A pays the price. The contract

is said to have been discharged by mutual performance. 91

Performance of the Contract

promisor

promisee

2.6.1 Duties of the seller

It is the duty of the seller to deliver the goods in accordance with the terms of the

contract of sale. The ordinary rule is that the seller should be ready and willing to deliver

on receiving the price, and the buyer shall be ready and willing to pay the price in

exchange for delivery. This rule however may be varied by agreement between the parties.

91
https://accountlearning.com/performance-of-contract-meaning-types-of-performance/
 30

(i) Delivery

It is the duty of the seller to deliver the goods in accordance with the terms of the

contract of sale. 92

Delivery of goods sold may be made by doing anything which parties agree shall be

treated as delivery or which has the effect of putting the goods in the possession of the

buyer or of any person authorized to hold them on his behalf. 93

(ii) Effect of Part of Delivery

A delivery of part of goods, in progress of the delivery of the whole has the same

effect, for the purpose of passing the property in such goods, as a delivery of the whole;

but a delivery of part of the goods, with an intention of severing it from the whole, does

not operate as a delivery of the remainder. 94

Apart from any express contract, the seller of goods is not bound to deliver them

until the buyer applies for delivery. 95

(iii) Rules Relating to the Delivery of Goods

Whether it is for the buyer to take possession of the goods or for the seller to send

them to the buyer is a question depending in each case on the contract, express or

implied, between the parties. Apart from any such contract, goods sold are to be delivered

at the place at which they are at the time of the sale, and goods agreed to be sold are to

92
Section 31 of the Myanmar Sale of Goods Act 1930
93
Section 33 of the Myanmar Sale of Goods Act 1930
94
Section 34 of the Myanmar Sale of Goods Act 1930
95
Section 35 of the Myanmar Sale of Goods Act 1930
 31

be delivered at the place at which they are at the time of the agreement to sell, or, if not

then in existence, at the place at which they are manufactured or produced. 96

Where under the contract of sale the seller is bound to send the goods to the buyer,

but no time for sending them is fixed, the seller is bound to send them within a reasonable

time. 97

Where the goods at the time of sale are in the possession of a third person, there is

no delivery by seller to buyer unless and until such third person acknowledges to the buyer

that he holds the goods on his behalf: Provided that nothing in this section shall affect the

operation of the issue or transfer of any document of title to goods. 98

Demand or tender of delivery may be treated as ineffectual unless made at a

reasonable hour. What is a reasonable hour is a question of fact. 99

Unless otherwise agreed, the expenses of and incidental to putting the goods into a

deliverable state shall be borne by the seller. 100

exchange

delivery

authorized

bound

agreement to sell

acknowledges

demand

96
Section 36(1) of the Myanmar Sale of Goods Act 1930
97
Section 36(2) of the Myanmar Sale of Goods Act 1930
98
Section 36(3) of the Myanmar Sale of Goods Act 1930
99
Section 36(4) of the Myanmar Sale of Goods Act 1930
100
Section 36(5) of the Myanmar Sale of Goods Act 1930
 32

incidental

(iv) Delivery of wrong quantity

Where the seller delivers to the buyer a quantity of goods less than he contracted to

sell, the buyer may reject them, but if the buyer accepts the goods so delivered he shall

pay for them at the contract rate. 101

Where the seller delivers to the buyer a quantity of goods larger than he contracted

to sell, the buyer may accept the goods included in the contract and reject the rest, or he

may reject the whole. If the buyer accepts the whole of the goods so delivered, he shall pay

for them at the contract rate. 102

Where the seller delivers to the buyer the goods he contracted to sell mixed with

goods of a different description not included in the contract, the buyer may accept the

goods which are in accordance with the contract and reject the rest, or may reject the

whole. 103

The provisions of this section are subject to any usage of trade, special agreement

or course of dealing between the parties. 104

Unless otherwise agreed, the buyer of goods is not bound to accept delivery thereof

by installments. 105

Where there is a contract for the sale of goods to be delivered by stated

installments which are to be separately paid for, and the seller makes no delivery or

defective delivery in respect of one or more installments, or the buyer neglects or refuses

101
Section 37(1) of the Myanmar Sale of Goods Act 1930
102
Section 37(2) of the Myanmar Sale of Goods Act 1930
103
Section 37(3) of the Myanmar Sale of Goods Act 1930
104
Section 37(4) of the Myanmar Sale of Goods Act 1930
105
Section 38(1) of the Myanmar Sale of Goods Act 1930
 33

to take delivery of or pay for one or more installments, it is a question in each case,

depending on the terms of the contract and the circumstances of the case, whether the

breach of contract is a repudiation of the whole contract, or whether it is a severable

breach giving rise to a claim for compensation, but not to a right to treat the whole

contract as repudiated.106

wrong quantity

installments

neglects

2.6.2 Duties of the buyer

Where goods are delivered to the buyer which he has not previously examined, he is

not deemed to have accepted them unless and until he has had a reasonable opportunity

of examining them for the purpose of ascertaining whether they are in conformity with the

contract. 107

(i) Buyer’s Right of Examining the Goods

Unless otherwise agreed, when the seller tenders delivery of goods to the buyer, he

is bound, on request, to afford the buyer a reasonable opportunity of examining the goods

for the purpose of ascertaining whether they are in conformity with the contract. 108

(ii) Buyer’s Duty to Accept the Goods and Pay the Price

The buyer is deemed to have accepted the goods when he intimates to the seller

that he has accepted them, or when the goods have been delivered to him and he does

106
Section 38(2) of the Myanmar Sale of Goods Act 1930
107
Section 41(1) of the Myanmar Sale of Goods Act 1930
108
Section 41(2) of the Myanmar Sale of Goods Act 1930
 34

any act in relation to them which is inconsistent with the ownership of the seller, or when,

after the lapse of a reasonable time, he retains the goods without intimating to the seller

that he has rejected them.

Buyer not bound to return rejected goods. 109

(iii) Buyer not bound to Return Rejected Goods

Unless otherwise agreed, where goods are delivered to the buyer and he refuses to

accept them, having the right so to do, he is not bound to return them to the seller, but it

is sufficient if he intimates to the seller that he refuses to accept them. 110

(iv) Liability of Buyer for Refusing Delivery of Goods

When the seller is ready and willing to deliver the goods and requests the buyer to

take delivery, and the buyer does not within a reasonable time after such request take

delivery of the goods, he is liable to the seller for any loss occasioned by his neglect or

refusal to take delivery, and also for a reasonable charge for the care and custody of the

goods: provided that nothing in this Section shall affect the rights of the seller where the

neglect or refusal of the buyer to take delivery amounts to a repudiation of the contract. 111

ascertaining

in conformity with

intimates

lapse

retains

occasioned

refusal

109
Section 42 of the Myanmar Sale of Goods Act 1930
110
Section 43 of the Myanmar Sale of Goods Act 1930
111
Section 43 of the Myanmar Sale of Goods Act 1930