SALE OF GOODS ACT 1893.

[56 & 57 VICT. c. 71.]

An Act for codifying the Law relating to the Sale of Goods.

[20th February 1894.]

Be it enacted by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:

PART I.

FORMATION OF THE CONTRACT.

Contract of Sale.

SALE AND

TO SELL.

1.-(1.) A contract of sale () of goods is a con- Sect. 1. tract whereby the seller transfers or agrees to trans- AGREEMENT fer the property in goods to the buyer for a money consideration, called the price. There may be a contract of sale between one part owner and another.

(2.) A contract of sale may be absolute or conditional.

(3.) 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. (a)

B

Sect. 1.

(4.) 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."

NOTES.

(a) "Contract of sale' includes an agreement to sell as well as a sale," and "sale' includes a bargain and sale as well as a sale and delivery" [Sect. 62 (1)]. "Bargain and sale" (sometimes called "executed sale ") is to be distinguished on the one hand from "agreement to sell," and on the other hand from "sale and delivery." Bargain and sale," though unaccompanied by delivery, may pass the property to the purchaser, but if delivery has followed, it becomes "sale and delivery." The distinction between "sale" (i.e. “bargain and sale ") and "agreement to sell" is noticed below. COM. infra, p. 4.

(b) "Goods' include . money" [Sect. 62 (1)].

all corporeal moveables except

(c) "Seller"-" Buyer." See definitions, Sect. 62 (1).

(d) "Property' means the general property in goods, and not merely a special property " [Sect. 62 (1)]. The terms "general" and "special" as applied to property are now introduced for the first time into the law of Scotland. COM. infra, p. 5.

(e) Price. See Sections 8 and 9.

(f) Part owners. In Scotland it has never been doubted that one part owner may sell his interest to another, but the English law of co-ownership rests on an unsatisfactory basis. The difficulty perhaps arises from the extreme development in English law of the principle that one cannot contract with himself, a theory which frequently leads to injustice, especially in connection with trusts and partnership.-See Lindley on Partnership, 6th ed. p. 31 et seq.

(g) The contract may be conditional in itself, or it may inIclude a condition as one of its terms. The distinction is important. See Coм. infra, p. 7.

(h) "Transferred from the seller to the buyer." In England, and now also in Scotland, there is a re-transfer of the property in certain cases from the buyer to the seller, as where the buyer recovers damages for non-delivery under Sect. 51. See COM., Sect. 43 post, p. 201.

(i) E.g. in Section 18, Rule 1 refers to "sale," and Rules 2 and 3 to "agreement to sell." Under Rules 4 and 5 an "agreement to sell" becomes a "sale."

sale.

legal principles

Differences

between the

as to transfer

Sale as a contract has the same general characteristics General charin every system of jurisprudence. The transfer of the acteristics of absolute or general1 property distinguishes it from the contracts of loan, hire, carriage or other bailment, while the money consideration or price distinguishes it from donation and exchange or barter.3 But the legal principles involved Variations of vary in different countries, and the terminology employed and terminoften differs in its application. Thus the definition of ology. sale given in this section does not describe the contract as it existed in the law of Scotland before the passing of this Act. In Scotland the seller did not transfer the property by the contract; he only agreed to transfer it. law of England The contract formed the sale, but its effect was merely to and Scotland give a titulus transferendi dominii; it did not operate of property. as a conveyance in the buyer's favour. The contract was personal between the seller and the buyer, giving the latter in the case of the sale of a specific article a jus ad rem specificam, but no jus in re. The seller remained the re.1 owner of the goods until delivery, and he might therefore validly sell the same goods to a second buyer transacting with him bona fide and obtaining delivery. In this case the second buyer's right could not have been called in question by the original buyer, whose only remedy was a personal action against the seller for damages for breach of contract. Again, prior to the Mercantile Law Amendment Act, Scotland, 1856,5 the seller's creditors could seize goods sold but not delivered, and were not bound to recognise any right in the buyer. The principle of the law of England,

1 The term 66

general property" explained infra, p. 5.

2 A contract for the supply of steam power is sale, not lease-Clark v. Stewart (1872), 10 S.L. R. 152. In Ferguson v. Fyffe (1868), 6 S. L.R. 68, it was doubted whether a contract as to turnips to be consumed by sheep in the field where grown, constituted a sale of the turnips or a lease of the land.

3 The distinctions here referred to relate primarily to the subject of the contract. Other distinctions affect the parties or the mode, e.g. a sale by a principal or by an agent or a sale of material combined with the services of an artificer or workman. As to sale conjoined with locatio operarum, see

Bell's Com. i. 193, 194.

"Property or dominion passes not by conditions or provisions, but by tradition and other ways prescribed in law."-Stair, i. 14. 5.

5 19 & 20 Vict. c. 60.

"Until possession was given to the purchaser, the seller's trustee had the

Sect. 1.

ment to sell.

to which the law of Scotland is now assimilated, is set forth in this section, and in Sections 17 and 18. In a sale of specific goods in a "deliverable state,"1 the seller (where there are no special conditions) transfers the property to the buyer by the mere force of the contract irrespective of Sale and agree delivery. This is called a "sale" as distinguished from an agreement to sell," which, as defined in this section, refers to a transfer of the property at some future time. The phrase "agreement to sell," is generally applied to what is known as an "executory sale," ie. where the seller undertakes to manufacture or procure the goods and to deliver them at a future time, or where the goods are not in a deliverable state" or require to be weighed, measured, or tested.2 A sale as distinguished from an "agreement to sell" is also known in English law as a "bargain and sale." We are thus met at the threshold of the Act by an important change in the law of Scotland. The principles now imported from England have been adversely criticised by many of our judges and text-writers, and have been unfavourably contrasted with the Scottish rules now supplanted. There is probably truth in much of this criticism, but in balancing expediency our legislators have deemed it better to assimilate the law, even at the sacrifice of more logical and better defined principles.*

Scottish criticisms upon the English rule.

English terms not clearly understood in Scotland.

It is to be noted, however, that the English rule as to the transfer of the property in goods sold but not delivered has not been clearly understood even by those of our standard Scottish text-writers who have undertaken to contrast the two systems. Thus Mr. Mungo P. Brown, whose work on Sale, published in 1821, was justly characterised by Lord President Inglis as a "scientific treatise" by "a very

option either of enforcing the contract against him or of taking the thing sold, leaving the purchaser to rank for a dividend upon the amount of loss he sustained by non-fulfilment of the contract."-Per Lord Watson in Seath and Co. v. Moore (1886), 13 Ret. H.L. 57 at p. 64.

1 "Deliverable state" is defined in Sect. 62 (4).

2 See Sect. 18, Rules 2 to 5.

3 E.g. by Lord President Inglis in Anderson v. M'Call (1866), 4 Macp. at p. 770; by Lord Jus.-Clk. Moncreiff in Gardiner v. M'Leavy (1880), 7 Ret. at p. 612; and Fleming v. Smith (1881), 8 Ret. at p. 548; and by Sheriff Guthrie in Spencer and Co. v. Dobie and Co. (1879), 7 Ret. at p. 396.

See further as to transfer of the property, Coм., Sect. 17 post, p. 80.

"3

4

perty and

high authority on this branch of the law," enters into an Sect. 1. explanation of the English use of the terms "absolute pro- Absolute or perty" and "special property "2 in order to show that the general probuyer's right in undelivered goods is not "absolute" but special pro"special." To some extent this error is due to the un- perty. certainty which long existed in England as to the exact nature of "vendor's lien," but nothing could be further from the truth than to speak of the buyer's property in goods still in the custody of the seller as "special." 'special."5 All modern English authorities describe sale as "a transfer of the absolute or general property."" "A transfer of the special property is not a sale of the thing," and accordingly the Act specially defines "property as "the general property in goods and not merely a special property.' Professor Bell, both in his Principles and his Commentaries, falls into the same error.9 "In England," he says, "the completion of the mere contract is said to pass the property. But it is not the absolute property which so passes: it is only a qualified and imperfect right which subjects the buyer to the risk of the commodity, but confers on him no title to demand possession of it or to exercise any dominion over it; and it therefore cannot be said that the property passes otherwise than nominally, until the contract is followed by delivery and possession." This statement, except in so far as it refers to the risk, does not represent the English law which we are now called upon to observe and administer in Scotland. But it is only fair to Professor Bell to observe that in his little

Pro

1 In Murdoch and Co., Ltd., v. Greig (1889), 16 Ret. 396 at p. 401. fessor Bell also held M. P. Brown's work in high estimation.-Bell's Com. i. 458, note. 2 M. P. Brown on Sale, pp. 5, 6. 3 Ibid. pp. 6, 21. 4 "The extent of the unpaid vendor's right whilst he is in possession of the goods is one on which the law is more unsettled than any person not practically acquainted with the subject could anticipate."-Blackburn on Sale, 2nd ed. p. 445.

5.66

'Special property" as a legal phrase narrowly escaped being introduced into Scotland in 1770 through a House of Lords judgment in a Scotch appeal.-See Hastie and Jamieson v. Arthur (1770), Mor. 14209. In this case the words were used in their proper sense.

66

6 E.g. Benjamin, p. 1; Story, Sect. 1. The word "property" used without qualification means 'general property." See Blackburn on Sale, 2nd ed., Intro. ix. and p. 123 et seq.; Campbell on Sale of Goods, 2nd ed. p. 38 et seq. 7 Benjamin, p. 2. 8 Sect. 62 (1).

9 Bell's Prin., Sect. 86, note; Bell's Com. i. pp. 176, 177, and note, p. 177.