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
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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