Week 2: Sale of Goods

Week 2 – Sale of Goods

Subject: LAW10013 – Commercial Law
Lecturer: Nick Nicolopoulos

Overview

This week introduced the Sale of Goods Act 1958 (Vic) and examined contracts for the sale of goods as a statutory overlay upon general contract law. The unit emphasised the formation, classification of goods, implied terms, title and risk, performance, and remedies for breach. Students explored distinctions between conditions, warranties, and intermediate stipulations, and learned when risk and property pass to the buyer.

Key Concepts and Legal Doctrines

1. Sale of Goods – Formation

Definition
A sale of goods contract involves a transfer or agreement to transfer property in goods for money consideration (Goods Act 1958 (Vic) s 6).

Elements

Goods (existing, future, specific, unascertained)
Money consideration
Transfer or agreement to transfer property

Key Case
Vali v Whipp (1899) 1 QB 413 – Sale by description occurs even when goods are seen but purchased relying on description

“Where goods are sold by description, it is not enough that the goods are merely merchantable; they must also correspond with the description.”

2. Classification of Goods

Categories

Existing goods: Owned or possessed at contract time
Future goods: To be manufactured or acquired after contract
Specific goods: Identified at contract time
Unascertained goods: Not specifically identified at contract

3. Terms of the Contract

Types of Terms

Condition: Fundamental term, breach allows rescission + damages
Warranty: Minor term, breach allows damages only
Intermediate stipulation: Between condition and warranty; seriousness of breach determines remedy

Key Case
Henry Kendall & Sons v William Lillico & Sons Ltd [1969] 2 AC 31 – Merchantable quality defined as suitable for usual purpose

“Merchantable quality means that goods are in such a state that they would be saleable under that description.”

4. Implied Terms under Goods Act

Implied by Goods Act 1958 (Vic) s 18 unless excluded:

Title - seller has right to sell
Description - goods correspond with description
Merchantable quality - goods fit for ordinary purpose
Fitness for purpose - goods suitable for buyer’s specific purpose (if disclosed)

Study Tips

Key Principles

‘Follow the goods’ - track property, risk, and possession
Differentiate actual transfer vs agreement to transfer
Identify whether terms are express, implied, or intermediate
Hierarchy of terms affects available remedies

Common Issues

When does property pass to buyer?
When does risk transfer?
Can implied terms be excluded?
What remedies are available for breach?