Kenyan Sale of Goods Act (Chapter 31, Laws of Kenya)

How should it be interpreted? According to Lord Herschell we should look for the language meaning to find its contextual meaning then to the purpose of the act, what mischief was being remedied by the drafters[1]

Section 1 and 2 of the sale of goods Act basically gives the unique meanings that are to be given to various terms in the act. Section 3 starts by outlining that a contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a money consideration called the price[2], this contract may be absolute or conditional. It also distinguishes between a sale and an agreement to sale: where under a contract of sale the property in the goods is transferred from the seller to the buyer then this is called a sale, whereby this transfer is based on a future condition then this is called an agreement to sale. 

Section 3(1) defines the contract for the sale of goods a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a money consideration, called the price. Close analysis need be paid to the elements of this definition; Property this is the bundle of rights that someone has in relation to a subject matter[3], Goods include all chattels,personal other than things in action and in money and all implements..[4],price is preferably money consideration.

According to section 4 the capacity to buy and sell is governed by the law concerning capacity to contract and to transfer and acquire property. Infants and persons of unsound mind must pay a reasonable price for necessaries, not necessarily the agreed price, Necessaries being goods as suitable to the conditions in life of such infant or minor or other person and to his actual requirements as to time of sale and delivery[5].

According to section 5 a contract of sale may be made in writing, by word of mouth or partly in writing and partly by word of mouth or may be implied from the conduct of the parties however any contract for the sale of goods that is of the value of 200 shillings and above must be in writing.

Section 7 dwells on the subject matter of the contract which is goods. Types of goods include future goods[6], perishing goods[7] and goods perished after an agreement to sell[8]. A contract of sale must be supported by money consideration called price[9], the ascertainment of this price may be expressly fixed by the parties[10], valuated by a third party[11] or be reasonable in the circumstances.

According to section 13 a condition[12] is a stipulation essential to the main purpose of the contract, the breach of which gives rise to a right to treat the contract as repudiated whereas a warranty[13] is a stipulation collateral to the main purpose of the contract, the breach of which gives rise to a claim for damages but not to a right to reject the goods and treat the contract as repudiated. The stipulation of whether a term is a condition or a warranty depends in each case upon the construction of the contract.  Under the Act the buyer may elect to waive the condition or may elect to treat the breach of such condition as a breach of warranty then claim damages

According to section 14 there may be implied conditions and warranties in contracts of sale this may be through statutes or courts of law. The Sale of Goods Act implies both conditions and warranties in contracts of Sale of goods unless a different intention appears. The implied warranties include the buyer enjoying quiet possession of goods and that the goods shall be free from any encumbrance by a third party.  Implied conditions include The Right to sell[14], Corresponding Sale by description[15], condition as to quality or fitness[16], condition as to merchantability (fit for use)[17], sale by sample[18]. However by virtue of section 55 all this may be excluded through an express agreement by the parties but does not negate a condition[19].
According to section 19 the transfer of property in goods occurs at such a time as when the parties to the contract intended if otherwise then rules have been laid down.

Rule 1 when there is an unconditional contract for the sale of specific goods in a deliverable state then it passes when the contract is made[20], rule 2 when the specific goods are not in a deliverable state then property doesn’t pass until they are in a deliverable state.[21] Rule 3 where goods are in a deliverable state but the seller is bound to weight them e.t.c for purposes of ascertaining the price the n it does not pass until after that is done. Rule 4 when goods are delivered to buyer on approval then property passes when buyer signifies approval to the seller, if he doesn’t signify approval but retains the goods then retains the goods without notice of rejection then property passes[22]. Rule 5 where the goods are unascertained in a contract property does not pass until after they are ascertained.

Transfer of title: No one can give what he has not is enshrined under section 23(1) subject to a few exceptions as Sale under a voidable title, Sale by a mercantile agent, Sale by buyer in possession, sale by seller in possession, sale by order of the court, title by estoppel.

Performance: it is the duty of the seller to deliver the goods and of the buyer to accept the goods; delivery is the voluntary transfer of possession from one person to another. There are rules as to delivery which must be adhered to e.g seller is under a strict liability to deliver goods of the right quantity.

Acceptance takes place when the buyer intimates to the seller that he has accepted the goods, when goods have been delivered, when he retains the goods after the lapse of a reasonable period. The buyer is liable for an action on damages for non-acceptance when the seller is ready and willing to deliver the goods but buyer refuses.

According to section 39 an unpaid seller is one who has not received the full price, or when a negotiable instrument was used as payment and that negotiable instrument has been dishonoured. His rights are enshrined in Section 41 to 48 of the Sale of Goods Act, this include that the unpaid seller who is in possession of the goods sold, is allowed to retain possession where the goods are not subject to credit provision, this is known as the exercise of a lien over the goods. This right ends when the goods are delivered to a carrier for transmission without reserving the rights of disposal over the goods, where the buyer or his agent obtain lawful possession of the goods and by waiver of the lien or right of retention. The unpaid seller has a right of stoppage in transit this is when he has dispatched the goods but realizes of the buyers insolvency then he can stop them in transit. The unpaid seller may rescind and resale the goods. He also has personal remedies against the buyer namely: action for the price; and action for damages for non-acceptance: seller can recover the estimated loss directly and naturally resulting from the buyer’s breach, this is calculated at the basis of contract law.

Remedies of the buyer: Buyer has an action for damages when the seller fails to deliver goods, or delivers them late or delivers them at a place other than the agreed place and this results in loss for the buyer, the buyer is entitled to recover compensation. Buyer has the remedy of specific performance and this is an equitable remedy[23] the buyer may compel the seller to specifically honor his part of the bargain where the goods sold are specific or ascertained. It is discretionary and will only be granted when damages are not adequate and when the goods are of a special value. Buyer has the remedy for the recovery of price if he had paid the price and goods weren’t delivered. Where there is a fundamental breach then the buyer is entitled to reject the goods and treat the contract as repudiated. In the advent of a breach of warranty then the buyer is entitled to set up against the seller the breach of warranty in diminution, or extinction of the price and maintain an action against the seller for damages for the breach of warranty.
Onwards from section 58 it enacts the following rules in case of sale by an auction; where goods are in an auction each is deemed to be bought on a separate sale, sale is complete when auctioneer announces it in the customary manner, where sale by auction is not notified to be subject to a right to bid on behalf of the seller it is unlawful or the seller to bid himself or any person to bid on his behalf ad if the seller makes use of pretending bidding to raise the price the contract is voidable at the option of the buyer.

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[1] Bank of England V. Vagliano Bros 1891 A.C

[2] General Principles and Commercial law in Kenya pg 230

[3] United States v. Craft, 535 U.S. 274, 278, 152 L.Ed.

[4] Section 2, Sale of Goods Act

[5] Section 4(2);Nash v Inman [1902] 2 KB;  Peters v Fleming (1840) 151 ER 314; A.S.B v S.P.B & another [2009] eKLR

[6] Existing goods,goods to be manufactured or acquired by the seller.

[7] Goods which perish before the contract void the contract

[8] This voids the agreement

[9] Section 3

[10] Section 10

[11] Section 11

[12] Poussard v Spiers (1876) 1 QBD 410

[13] Bettini v Gye 1876 QBD 183 

[14] Section 14(a); Rowland V Divall, 1923 2 KB 500

[15] Section 15, Varley V Whipp 1900 1 QB 513

[16] Section 16,Exception to Caveat Emptor rule; Baldry v Marshall 1925 1 KB 260

[17] Section 16(b) ; Morrelli V Fitch & Gibson 1928 2 K. B. 636

[18] Thornett & Fehr v Beers & Sons, 1919 1 KB 486

[19] Baldry v Marshall Ibid

[20] Dennant v Skinner 1948 2 All E.R. 29

[21] Under Wood v Burgh Castle Syndicate, (1922) 1 KB 343 (CA)

[22] Kirkham v Attenborough 1897

[23] Section 52Sale of Goods Act