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Chapter 16 Sales of Goods Act.docx

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Department
Accounting
Course
ACTG 2P40
Professor
P.Maloney
Semester
Fall

Description
Chapter 16 Sales of Goods 1. Application of the Sales of Goods Act  The „Sales of Good‟ is governed by Act made by law  The „Sales of Good Act‟ applies that “a contract whereby the seller transfers or agrees to transfer the property in the goods to the buyer for a money consideration, called the price” a) Meaning of Sale  Where the person transfers – transfers by both the legal title and physical possession of the good  Does not apply to exchange of goods (barter)  Does not apply to leases ( no legal title transferred )  Does not apply to consignments  Does not apply to non-contractual transfers of land  Legal title and physical possession must happen! b) Meaning of Goods  Defining „Goods‟ – all chattels personal other than things in action and money  „all chattels personal‟ – personal property ( not real estate , must be personal property )  must be a tangible personal property  DOES NOT APPLY TO REAL ESTATE!  „things in action‟ – meaning does not apply to intangible goods like trademarks, patents or logos  „other than money‟ – a good can not be money  money must be legal tender  “for a money consideration‟ – in exchange  TANGIBLE PERSONAL PROPERTY THAT‟S BEING EXCHANGED FOR MONEY! Does the Sales of Goods Act Apply? If yes , then following rules apply 1. Statutory Protection for the Buyer: Implied Terms a) The Caveat Emptor Principle  “Buyer Beware”  it is always on the buyer to be aware to what they are purchasing – to do any necessary research on the good to be satisfied before buying the good  the Sales of Good Act provides some relief from the caveat emptor principle for the buyer b) Terms implied in Every Contract to which the Sales of Good Act Applies – Buyer  Even if a formal contract was not made these terms are still enforced by the sales of good act – like a contract exist – even though not made  The buyer can assume all of the following terms when purchasing i) The Seller has the legal Title to the goods and the right to Sell the Goods  This means the buyer can assume the seller has legal title to the goods and the right to sell the goods ii) The Goods Correspond with the Sellers Description  When the seller has provided some description of the goods the buyer can assume that the goods correspond to the description iii) Suitability and Quality of Goods  Suitability – SOG Act says – an implied term that the good is fit for the purpose intended  The more you tell the seller what you need the good for, the more the seller will know the buyers suitability  Quality – the good will be of merchant quality – free from manufactured defect iv) Sale By Sample  Where there is a sale made on the basis of a sample – the goods must correspond with the sample good 2. Other Rules Which Apply to Contracts for Sales of Goods a) Exemption Clauses  This is an exemption on a good that specifically says “none of the provisions provided by the Sales of Good Act apply to this good  the party must be aware they are giving up their rights under the Sales of Good Act b) Payment “Silent of Payment”  If the time of payment is silent then it occurs on the day of delivery in cash – if silent c) Delivery i) Terms Relating to the Quantity to be Delivered  When the parties of agreed to a specific quantity of goods to be delivered – and the amount is SUBSTANTIALLY different then the buyer can reject the good(s) ii) Terms Relating to the Time of Delivery  When parties have agreed to a specific time of delivery then the goods will be delivered on this time – if the time is silent then the goods we be delivered at a reasonable time iii) Terms Relating to the Place of Delivery  When partied have destined a place of delivery then the goods will be delivered in this spot – if silent then the goods will be delivered at the sellers place of delivery 3. Passage of Title to the Good  When does the legal title pass from the seller to the buyer?  Goods being lost, stolen or damaged during Transportation causes problems 1. FOB – Free on Board  FOB holds that the seller bares the risk of cost until a specified time in transportation - but after the specified time the seller bares the risk 1. CIF – Cost Insurance Freight  CIF holds that the buyer holds the legal title of the good – but seller agrees to transfer and bare the risk until goods have been transported 2. COD – Cash on Delivery  COD holds that – no legal
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