18.1 Formation of Sales of Goods Contracts

A contract for the sale of goods is generally defined in the sales of goods legislation as a contract whereby

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the seller transfers or agrees to transfer, the actual property in the goods to the purchaser, a consumer

as defined under the legislation and hence its ownership for a money consideration called the price. In

order for the sale of goods legislation to apply it is necessary that there has been an actual purchase of

goods which are broadly defined and consist of different classifications for money consideration called

the price and an actual and immediate transfer of ownership of the property that is subject to the sales

contract. The term goods includes most forms of movable (tangible) personal property commonly referred

to  as  merchandise  of  which  there  are  four  categories  existing  goods,  future  goods,  specific  goods  and  

unascertained goods that are the subject of contracts of sales on a daily basis in trade or commerce and

that are easily transported from the seller to the buyer.

18.2 Consideration for Sale of Goods

Under  contract  law  an  essential  rule  is  that  for  a  contract  to  be  formed  and  enforced  that  valuable  

consideration must pass between the parties and this fundamental rule of contract law is also relevant

and applies to the sale of goods. Generally, the sale of goods legislation provides that consideration in

the  form  of  money  must  exist  in  order  for  a  contract  of  sale  to  be  valid.  If  goods  are  provided  free  of  

charge or are transferred through an exchange, barter or swap then then the sales of goods acts do not

apply as there was no consideration (price paid) to support the sale transaction. In this context, the term

‘price’  refers  to  the  cost  or  charge  to  purchase  the  goods  and  generally  the  price  paid  for  goods  when  

that  the  purchaser  (consumer)  has  acquired  possession  and  good  tile  to  that  good  and  has  ownership  

or property in the good purchased that was subject to the initial sale of goods contract.

Thus under the sale of goods contract, the price that is paid for the goods is the money consideration,

and as such, if there is no money consideration present, then there is no sale of goods contract and the

sale of goods legislation does not apply and in this instance, there is a swap, barter or exchange of the

specific goods. If there are situations where no actual price for the goods have been agreed upon by the

parties, then the buyer must pay a reasonable price and this is a question of fact in each case.

18.3 Transfer of Property

Transfer  of  property  or  ownership  means  that  the  ownership  in  the  goods  is  transferred  at  the  time  

of  the  contract  of  sale  and  is  formed  when  a  good  is  bought  by  the  purchaser  form  the  seller  and  is  

transferred upon the payment of the price being the consideration. If the transaction is to be caught by

the respective sale of goods legislation then there must be an actual transfer of ownership (or property).

Effectively  this  means  that  at  general  law,  when  a  good  is  bought  ownership  passes  from  the  seller  to  

the buyer and the sales of goods legislation effectively provides indicators that determine at what point

goods are transferred from the seller to the buyer where the intention of the parties in this instance is

lacking, unclear or not satisfied for whatever reason.

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