Section 1: contract of sale and classification of goods
By Section 1 of Act 137 a contract of sale of goods is a contract whereby the seller agrees to transfer the property in goods to the buyer for a money consideration called the price. The Act draws, and builds much upon, a threefold classification of goods. Specific goods are goods identified and agreed upon at the time the contract is made. Unascertained goods are goods defined only by description and not identified at the time of contracting. Ascertained goods are goods that, though unascertained at the outset, have become identified to the contract afterwards.
Section 49(1): grounds on which the buyer may reject
The buyer’s right to reject is conferred by Section 49 of the Act. By Section 49(1) the buyer is entitled to reject the goods, and to refuse to pay or to recover the price, in three situations only: (a) where the seller is guilty of a breach of a fundamental obligation; (b) where the seller is guilty of a breach, not being of a trivial nature, of a condition of the contract; or (c) where the buyer entered the contract as a result of fraudulent or innocent misrepresentation by the seller.
The first is that a rejection presupposes communication: there must be an intimation to the seller. A decision to reject locked in the buyer’s own breast, never conveyed, is no rejection. The second is that the buyer who would reject must be able to prove that he did so, and when; the burden of establishing a valid and timely rejection lies on the buyer who asserts it.
Section 66: cash price, note or memorandum and enforceability
It is clear therefore that it is the seller who suffers for non-compliance with the provisions of section 66 (1) of Act 137 and this is as it should be, as the duty of stating the cash price in writing is imposed by the Act on the seller and not on the buyer.
The whole history of legislative incursions into the field of hire-purchase law shows that the primary concern of the legislature has been the protection of the buyer, hirer or consumer from the cupidity and rapacity of sellers or, owners, and from their own inexperience and gullibility. The trend of legislation has been to limit the rights of the owner or seller at common law, and to confer more effective rights on the buyer, hirer or consumer. The rights of the buyer at common law have largely not been limited. The right of the hirer or buyer to enforce a hire-purchase agreement is not affected by the absence of writing although a seller cannot do so except the agreement is in writing or the court dispenses with this requirement under section 66 (4) of the Act.
Section 69: recovery of possession after fifty per cent is paid
Section 69 of the Sale of Goods Act, 1962 (Act 137), is the high-water mark of the legislative effort at protecting the hirer or consumer from the actions of the seller. Section 69 provides: “(1) Where goods have been delivered to a buyer under a contract of hire-purchase, and at least fifty per cent, or such other minimum percentage as may be prescribed, of the hire-purchase price has been paid or tendered by or on behalf of the buyer, the seller may not enforce any right to recover possession of the goods from the buyer otherwise than by action. (2) If a seller recovers possession of goods in contravention of subsection (1) the hire-purchase contract, if not previously determined, shall determine, and— (a) the buyer shall be released from all liability under the contract and shall be entitled to recover from the seller all sums paid by the buyer under or in respect of the contract; and (b) any guarantor shall be entitled to recover from the seller all sums paid by him under or in respect of the contract of guarantee.”
Where there is a sale and not a mere bailment of goods under a contract of hire with an option to purchase, and there is superimposed on that sale an express right to retake possession of the goods, the buyer in my view can maintain an action for detinue or conversion if that right to retake possession is wrongfully exercised, e.g. by exercising it in contravention of the provisions of the Act where more than 50 per cent of the purchase price has been paid. Where there is a sale with no such express right reserved, the buyer’s right to maintain an action for damages is clearly unaffected even though the agreement is a hire-purchase contract under the Sale of Goods Act, 1962. In these cases it is my view that the remedy provided under section 69 of the Sale of Goods Act, 1962, cannot be said to be exhaustive, nor the only remedy available to a buyer who has paid more than 50 per cent of the purchase price under a contract where such price is payable by five or more instalments. Where there is a bailment of the goods the buyer as is now well settled has no right of action in detinue or conversion, because the property in the goods remains in the seller.
The third mode of acceptance turns on what is a “reasonable time,” and here Section 77 is decisive: what is a reasonable time is in every case a question of fact. There is no fixed period. It depends on the nature of the goods, the circumstances of the trade, the opportunity the buyer has had to examine the goods, and the use, if any, to which he has put them.
The cornerstone of the seller’s position is Section 8, which is in these terms. In a sale of specific goods the fundamental obligation of the seller is to deliver those goods to the buyer; in a sale of unascertained goods it is to deliver goods substantially corresponding to the description or sample by which they were sold; and a provision of great practical importance, any term of the contract inconsistent with or repugnant to that fundamental obligation is void to the extent of the inconsistency. Section 8(3) thus places the seller’s core obligation beyond the reach of exemption clauses: a seller cannot, by the small print of his contract, contract out of the duty to deliver what he agreed to sell. This is one of the respects in which Act 137 is more protective of the buyer than the common law was, and it should be well understood by those who draft contracts of sale.
Section 81(1): definition of hire-purchase agreement
The Sale of Goods Act, 1962 (Act 137), states simply and realistically that a hire-purchase agreement is a contract of sale and it differs from other contracts of sale of goods only in respect to the terms provided for the payment of the purchase price; it must be in five or more instalments. The questions whether the property in the goods passes to the hirer or remains with the owner until the exercise of the option are largely irrelevant to the determination of whether a hire-purchase contract has been created or not. It follows therefore that where the purchase price is payable in less than five instalments, no hire-purchase contract is created even though the agreement is one for the hire of goods with an option in the hirer to purchase them at a further date, or whether all the other provisions of the Act have been complied with.
Sections 11 and 13: implied conditions as to description, quality and fitness
Under Section 11 of the Act, where goods are sold by description, there is an implied condition that, the goods correspond with the description; and it is settled that a sale may be by description even where the buyer has seen the goods, if he relies substantially on the description. By Section 13, although the general rule preserves the maxim caveat emptor, there being no implied condition of quality or fitness except as the section provides, there is an implied condition that the goods are free from defects not declared to or known by the buyer, save where he has examined the goods and the examination ought to have revealed the defect; and, where the seller deals in goods of that description and the buyer makes known the purpose for which they are required, an implied condition that the goods are reasonably fit for that purpose.
In any event, in absence of an express term of the contract, Section 13 of the Sale of Goods Act [137] implied a condition that the goods are free from defects unknown to the buyer and a further implied term that in certain circumstances, the goods are reasonably fit for the purpose for which they are required. The Court of Appeal acknowledged as proper, the trial court’s finding of fact that the defendants were in breach of their contractual obligation to supply a proper and fit vehicle. The Court of Appeal in explaining the meaning of Section 13 of Act 137, stated unequivocally that Ghana by that provision of the law, has moved away from the common law position of caveat emptor where the buyer must beware, to one of caveat glovoson that is to say, the seller must be aware of the goods he is selling.
Sections 13(1) (a) & (b) of Act 137 contain two different implied conditions of sale: 1) that the goods are free from defects that the seller does not inform the buyer of or that the buyer did not know of and 2) that where the buyer informs the seller of the purpose for the purchase, the goods are fit for that purpose.
Sections 26(2) and 27(2): passing of property and risk on delivery
Time is a material element for consideration where repudiation of a contract of sale is sought, since it is an element in the determination of the question whether property in the goods has passed. Though the intention of the parties is the vital index in this determination, section 26 (2) of the Sale of Goods Act, 1962 (Act 137), provides that: “Unless a different intention appears the property in the goods passes under a contract of sale when they are delivered to the buyer.” Thus any undue delay in rejection amounts to a positive assumption that the property in the goods has passed. Further as by section 27 (2), risk is the necessary concomitant of the passing of property, indeed her hand maiden, any undue retention necessarily settles the risk in the one who retains. A long period of retention must be equated with acceptance, the transfer of the property in the goods and the assumption of all risks.
It would seem therefore that the mere fact that the parties agree on their pleadings, and the trial judge also found as a fact that the agreement is a hire-purchase agreement is not enough under our Act to deprive the buyer of a right to claim damages in detinue or conversion for wrongful seizure. Much depends on the actual terms of contract which must be read as a whole and its substantial effect ascertained. Once the goods have been delivered to the buyer there is a presumption that the property in them has passed unless a different intention appears from the contract. Where no such intention appears, there must be an express provision conferring on the seller a right to retake possession of the goods.
Sections 51 and 52 then mark the outer limit of the right. By Section 51 the buyer may not reject goods which he has accepted. By Section 52 the buyer is deemed to have accepted the goods in any of three events: (a) where he intimates to the seller that he accepts them; (b) where, after delivery, he does an act in relation to the goods which is inconsistent with the seller’s continued ownership such as using, consuming, reselling or otherwise dealing with them as his own; or (c) where, after a reasonable time, he retains the goods without intimating to the seller that he rejects them. The first is acceptance by words; the second, acceptance by conduct; the third, acceptance by lapse of time. The policy is that a buyer may not keep goods, treat them as his own, and hold in reserve a right to reject them whenever it later suits him to do so.
In our candid opinion, and so do we find, that the plaintiffs never “accepted” the state of the vehicle. In these circumstances, we emphasize that title in the property did not pass. Title would have passed if the vehicle met the specification and purpose for which plaintiffs acquired it. Put differently, title in the property did not pass until the defendants had fulfilled their part of the bargain and delivered a brand new vehicle they contracted to sell to the plaintiffs. The plaintiffs set out to purchase a brand new Toyota Landcruiser station wagon vehicle and not an empty shell. Ordinarily, a person who has purchased a brand new vehicle would not expect thick smoke emitting from the vehicle. The Court of Appeal, therefore, erred in law in holding that there was an acceptance by the plaintiffs of that defective vehicle.
But it seems to me that the right to reject is lost by any unreasonable delay in doing so: see Fisher, Reeves & Co., Ltd. v. Armour & Co., Ltd. [1920] 3 K.B. 614, C.A. and Chao v. British Traders and Shippers [1954] 1 All E.R. 779. Where a buyer elects to keep a defective car for an inordinately long time, it is not open to him thereafter to avoid the transaction. By section 51 of the Sale of Goods Act, 1962 (Act 137), a buyer may not reject goods which he has accepted and by section 52 (b) a buyer is deemed to have accepted if “he does not, within a reasonable time after delivery of the goods, inform the seller that he rejects them.”
Where the seller wrongfully fails to deliver, the buyer’s action lies under Section 53, and by Section 54 the measure is the loss reasonably foreseeable at the time of contracting as likely to result from the breach, prima facie (where there is an available market) the difference between the market price and the contract price. Where the seller is in breach of a fundamental obligation, or of a condition or warranty, the buyer’s remedy is under Section 55 whether by action for damages or by setting up the claim in diminution or extinction of the price and Section 56 fixes the same foreseeability measure.
Sections 78 to 80: relation of the Act to customary law and the common law
The Sale of Goods Act, 1962 (Act 137) is the primary source of the law regulating contracts for the sale of goods in Ghana, customary law and the common law remaining secondary and operative only so far as they are not inconsistent with the Act (Sections 78 to 80). The Act is, in its structure and much of its language, modelled on the English Sale of Goods Act, 1893, and the English authorities decided on the parent statute remain of persuasive value where our provisions correspond.
