RULES OF DELIVERY IN A CONTRACT OF SALE

DUTY OF BUYERS AND SELLERS

By the provision of S.27 of the SOGA, it is the duty of the seller to deliver the goods and it is the duty of the buyer to accept and pay the price for the goods in accordance with the terms of their contract.

By the provision of S.28 SOGA, except it is otherwise provided in the contract, delivery of goods and payment for same are concurrent conditions. That means the seller must be willing to deliver the goods in exchange for the price and the buyer must be willing to pay for the goods in exchange for possession of the goods.                        

DELIVERY OF GOODS

Delivery has been aptly defined by S.62 of the Sales of Goods Act as “the voluntary transfer of possession from one person to another”. The Act in a number of sections, ranging from section 29 to 34, provides for rules that should be applied when delivery of goods is in question. These rules would be highlighted below.

General Rules of Delivery

1.Whether it is for the buyer to take possession of the goods or it is for the seller to send them to the buyer depends in each case on the terms of the contract express or implied between the parties; S.29(1) SOGA.

Apart from any contract express or implied, the place of delivery is the seller’s place of business if he has one.

If he doesn’t have a place of business, the place of delivery is the seller’s place of residence. If the contract is for the sale of specific goods that to the knowledge of the parties is at another place, that place would be the place of delivery.

2. Where under the contract the seller is meant to send the goods to the buyer but no time for delivery is specified, the time for delivery should be within a reasonable time; S.29(2) SOGA.

3. Where at the time of sale the goods are in the possession of a third party, there is no delivery until the third party acknowledges to the buyer that he holds the goods on the buyer’s behalf; S.29(3). However, nothing in this section would affect the operation of the issue or transfer of documents of title to the goods.

This method of delivery is called an attornment. For example, if the goods are in a warehouse, delivery will be said to occur when the warehouseman acknowledges to the buyer that the goods are held by him for the buyer.

4. Demand or tender of delivery might be termed ineffectual unless it is made at a reasonable hour. What is a reasonable hour is a question of fact; S.29(4) SOGA.

5. Unless otherwise agreed, the expenses of and incidental to putting the goods into a deliverable state must be borne by the seller; S.29(5) SOGA.

    Delivery of Wrong Quantity or Mixed Goods S.30 SOGA

1. Where the seller delivers to the buyer goods that are less than the amount agreed upon, the buyer may reject them. If the buyer accepts them, he must pay for them at the contract rate; S.30(1).

2. Where the seller delivers to the buyer a quantity that is more than the amount agreed during the contract, the seller could either accept the quantity agreed upon and reject the rest. He could also choose to reject the whole quantity; S.30(2). If the buyer chooses to accept the whole quantity, he has to pay for them at the contract rate.

In the case of Polak and Faon vs George Cohen Ltd 1969 NCLR 433 the defendant contracted to sell goods to the plaintiff stating the quantity as “3500 tonnes, 10% more or less at buyer’s option”. The plaintiff after enquiry accepted the figure of 3500 tonnes 10% over 3500 tonnes. The defendant supplied 3568 tonnes.

The court held that where a contract of the supply of goods states the quantity followed by a given percentage “more or less”,  and the buyer makes no choice, the supplier is not bound to deliver the exact quantity but within given percentage of it whether more or less so that the delivery of the least quantity within the given percentage is good performance.

Where the variance allowed is at the buyer’s option, and the buyer validly exercises his option, the supplier is bound to deliver the quantity so demanded by the buyer.

It was also held that in a situation in which the buyer makes no choice, the damages would not be for non-delivery of the initial amount, but for non-delivery of the least quantity within the percentage range. But when the buyer makes a choice which the seller doesnt comply with, the damages are for non-delivery of the specific amount requested for by the buyer.

Thus, in this case, since the buyer made a choice of 10% above 3500 tonnes(3850) and the seller delivered 3568, the seller is liable under this contract of sale.

3. Where the seller delivers to the buyer goods agreed upon in the contract but they are mixed with other goods, he may accept the goods according to the contract and reject the rest or he may reject the whole goods supplied;S.30(3) SOGA.

4. The provisions of this section are subject to any usage of trade, special agreement or course of dealing between the parties; S.30(4) SOGA.

                Instalmental Delivery of Goods S.31 SOGA

1. Unless otherwise agreed, the buyer of goods is not obligated to accept goods delivered by installments;S.31(1).

In the case of Mustapha and Co vs NCEI (1955) 21 NLR p 69, the terms of the contract provided inter alia for “delivery from factory January 1954”. Part of the goods left the factory in January 1954 and the remainder left early the following month as a result of which the buyer refused to take any part of the contract.

 The court held that the word “delivery” was to be construed in its normal as distinct from its legal or technical sense and that it meant that all the goods should leave the factory during January 1954. Since this had not been complied with, the defendant could not be compelled to accept even that part which arrived in January but could reject the whole because the contract was not severable.

2.  Where there is a contract for sale of goods to be delivered by installment and to be paid for installment by installment, if the seller delivers defective goods for one or more installments or the buyer doesn’t take delivery or pay for one or more installments, the question of whether this would cause the repudiation of the contract or the payment of damages depends on the terms of the contract and the circumstances of the particular case; S.31(2).

In the case of Mapleflock Co Ltd vs Universal Furniture Product Ltd (1934) 1 KB p.148 Parties entered into a contract for the sale of 100 tonnes of ragflocks. Delivery was to be made at the rate of three loads a week and each delivery to be separately paid for. The first 15 loads delivered were satisfactory but the 16th was not. In spite of this, the buyer took four more deliveries and then sought to repudiate the contract.

The court observed inter alia:

“…The true test would generally be the relation in fact of the default to the whole purpose of the contract. The main test to be considered are first, the ratio quantitatively which the breach bears to the contract as a whole. Secondly, the degree of probability or improbability that such a breach will be repeated…”

Thus, from the above, considering that 1 out of 20 installments was defective, the ratio is insignificant. Also, the probability that there would be a repeat of defective goods is very little since only one had been defective so far. Thus, the buyer cannot repudiate the whole contract. Rather, he only has a right to reject the defective installment.

Another case is that  of Regent OGH vs Francessco of Jenmy Ltd (1981) 3 ALL E.R @ 327. In this case, men suits were to be delivered by installments, the size of each installment/consignment being left to the plaintiff’s(the seller’s) discretion. One installment of 22 was delivered short of one and the buyer sought to repudiate the whole contract.

It was held that in this circumstance, the buyer could not repudiate. Comparing S.30(1) & 31(2) the court observed that:

“… if a misdelivered consignment is rejected, the result is to create a short delivery. S.30(1) and 31(2) in this respect, are not mutually consistent, one must yield to the other and it seems to me that the business sense of the contract of sales requires enough flexible provisions of S.31(2) to be applied in preference to those of S.30(1)…”

Thus, considering the circumstances of the case, it was held that the buyer could only reject the defective consignment and not the whole contract.

                 Delivery by Carrier S.32 SOGA

1. Where in pursuance of a contract of sale, the seller is authorised or required to send the goods to the buyer, delivery of the goods to a carrier, whether named by the buyer or not, for the purpose of transmission to the buyer, is prima facie deemed to be a delivery of the goods to the buyer; S.32(1).

In the Case of Nads Imperial Pharmacy vs Siemgluse (1989) NLR under a contract of sale, goods were sent by S in Hamburg to M in Lagos. The goods arrived in Lagos and M was notified. When M went for collection, it was discovered that the goods were lost through some unexplained cause and so M sued S for the goods or the price paid.The court held that according to the provisions of S.32(1) SOGA, delivery of goods to a carrier is prima facie delivery to the buyer. Thus, in this present case, delivery to the ship, who acted as the carrier, was considered as delivery to M. Since risk passes with transfer of property, M would have to bear the risk since they have been prima facie delivered to him.

2.  Unless otherwise authorised by the buyer, the seller must make such contract with the carrier on behalf of the buyer as may be reasonable, having regard to the nature of the goods and the other circumstances of the case. If the seller omits to do so, and the goods are lost or damaged in the course of transit, the buyer may decline to treat the delivery to the carrier as a delivery to the buyer, or may hold the seller responsible for the damages; S.32(2).

In the case of Thomas Young and Sons Ltd vs Hobson & Partners (1947) 6 ELR 365, under a contract of sale for certain electric engines, they were to be sent by the seller to the buyer via railway. The seller sent them at “owner’s risk” instead of at company’s risk at the same rate. If the seller had chosen “at company’s risk”, the railway be  responsible for any loss sustained. Subsequently. the engines were damaged in transit as they were not properly secured. The court, in applying S.32(2) of the SOGA held that the seller did not make a reasonable contract with the carrier and in such circumstances, the buyer can decide not treat delivery to a carrier as delivery to himself.

3.  Unless otherwise agreed, where goods are sent by the seller to the buyer by a route involving sea transit under circumstances in which it is usual to insure, the seller must give such notice to the buyer as may enable the buyer to insure them during their sea transit.

If the seller fails to do so, the goods shall be deemed to be at the seller’s risk during such sea transit; S.32(3) SOGA.

            Risk When Goods Are Delivered to a Distant Place

Where the seller of goods agrees to deliver them at the seller’s own risk at a place other than that where they are when sold, the buyer must nevertheless, unless otherwise agreed, take any risk of deterioration of the goods necessarily incident in the course of transit; S.33 SOGA.

           Buyers right of examining goods S.34

Where goods are delivered to the buyer which the buyer has not previously examined, the buyer is not deemed to have accepted them unless and until the buyer has had a reasonable opportunity of examining them in order to ascertain if they are in conformity with the contract;S.34 SOGA.

 Acceptance of Goods

According to the provision of S.35 of the Sales of Goods Act, the buyer would be deemed to have accepted the goods under three circumstances:

  • When he notifies the seller of his acceptance.
  • When the goods have been delivered to him and he does an act to the goods which is inconsistent with the ownership of the seller.
  • If he retains the goods after the lapse of a reasonable time without telling the seller that he has rejected them.

In the case of Ruben vs Faire Bros Co Ltd 1949 1 KB 254, the buyer after completing the purchase of the goods, told the seller to deliver the goods to a third party. When the seller did so, the third party rejected them on the ground that the goods were not in conformity to the contract. The court held that considering the fact that the goods were already purchased before delivery to the sub-purchaser, selling them to a sub-purchaser is an act inconsistent with the seller’s right and is thus acceptance.

In another case of Hammer and Barrow vs Coca-Cola (1962) NZLR 723, Coca-Cola bought 200 thousand yoyos from the plaintiff to be used in an advertising campaign. One of the terms of the contract was that of the 200 thousand, 85,000 would be delivered to the Northern bottling Company’s premises in Auckland. When the 85,000 yoyos were delivered, it was discovered that about 80 percent of the yoyos were defective. Coca-Cola thus refused acceptance of the goods.

The plaintiff company thus sued for the contract price. They relied on the provision of S.35 that acceptance is deemed to have taken place when the buyer does, in relation to the goods, an act inconsistent with the right of the seller. Thus, according to them, coca-cola in delivering the goods to a third party had accepted the goods.

The court held that this doesn’t apply in this situation. This is due to the fact that delivering the goods to the third party was part of the contract of sale. Thus, the act of the seller in delivering them to the third party was synonymous to delivering them to the buyer. Therefore, the acceptance of the goods would be subject to the right of the buyer to inspect them for defects as stated under S.34.    

           Buyer Not Bound to Return Rejected Goods

According to the provision of S.36 of the Sales of Goods Act, except otherwise agreed, if after the goods have been delivered to the buyer he rejects them, he is not bound to return them to the seller. However it is sufficient if the buyer notifies the seller of the rejection of the goods.

                Liability of Buyer for Neglecting or Refusing Delivery of Goods

According to the provision of S.37 of the Sales of Goods Act, when the seller is ready to deliver the goods and he requests the buyer to take delivery, but the buyer doesn’t within a reasonable time. The buyer would be responsible for any loss that occurs due to his refusal to take delivery and he shall also be responsible to the seller for a reasonable charge for the care and custody of the goods.

However, this section does not affect the right of the seller if refusal to take delivery of the goods by the buyer would amount to a repudiation of the contract. 

SOURCES

  1. Lecture delivered by Dr K.I Adam on Commercial Law, Faculty of Law, University of Ilorin.
  2. MC Okany: Nigerian Commercial Law
  3. Sale of Goods Act

Author: Olanrewaju Olamide

Olamide is an avid reader who believes that no knowledge is wasted. If he is not surfing the internet, he would be doing something else to get more information, whatever that is.

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