A
WRITE UP
ON
THE PLAINTIFF AND DEFENDANT IN
COMMERCIAL LAW IN NIGERIA,
COURSE TITLE- BUILDING LAW, ARC 510
COMPILED BY
ISAH OBENEGE SULEIMAN
(ARC/04/3204)
AND
JEGEDE OLADAPO OLADELE
(ARC/04/3199
SUBMITTED TO
THE DEPARTMENT OF ARCHITECTURE
FEDERAL UNIVERSITY OF TECHNOLOGY, AKURE.
LECTURER-IN-CHARGE PROF.OGUNSOTE
NOVEMBER, 2009
TABLE OF CONTENT
CHAPTER ONE
1.0 Introduction
1.1 Brief History of commercial law in Nigeria
1.2 Sales of Goods
1.3 Ingredient of sale of goods.
CHAPTER TWO
2.0 The Plaintiff And Defendant (Breach Of Contract Agreement)
2.1.1 The concept of “Goods”
2.1. 2 Price is an essential element of a sale contract.
2.1.3 Conditional - Sale Agreement
2.1.4 Credit sales Agreement
CHAPTER THREE
3.0 Remedies of Parties for Breach of Contract of Sale
3.1 References
CHAPTER ONE
1.0 Introduction
The word ‘law’ suggests the idea of rules; rules affecting the lives and activities of the people. Even in a primitive societies, traditions and customs will affect conduct. Such customary rules tend to be too vague and imprecise at this stage to merit the use of the term ‘law’ although they may provide the basis of later law. As the society develops and become more complex, rules of more definite nature emerge and body of law comes into existence.
The primary source of the law of sale of goods is the English sale of Goods Acts, 1893. It has been held to be a statute of general application and so applicable in Nigeria. It now applies only in the states of the Federation which have not enacted legislation on the subject. However, even in those States with local legislation their content are a verbatim reproduction of the provisions of the 1893 statute. In Henry Stephens Engineering Co. Ltd(The plaintiff), Complete Home Enterprises Nig. Ltd(The defendant) there was a sale of goods including a crane which the buyer contended was not of merchantable quality. In deciding the issue the High Court of Lagos State applied S.14(2) of the sale of Goods statute. The court of Appeal affirmed the decision of that court also without any reference to the local statute. The Supreme Court held that the judgements of the two lower courts were valid since they were in accordance with the provisions of the Sale of Goods Law, Cap. 125 of the Lagos State of Nigeria 1973. In fact S. 14(2) of the 1893 Act and S.15(2) of the Lagos State statute are identical.
1.1 Brief History of commercial law in Nigeria
In October 1986 a bold step was taken in an attempt to replace all the statutes of general application still in force in Nigeria with local enactments. Drafts of these statutes, including one on sale of goods, were considered at a national seminar organized by the Law Reform Commission. The draft on sale of goods assumes that sale of goods, at least, within a State, falls within the legislative competence of the state. This, however, may not be so under the present Constitution or the constitution of the Federal Republic of Nigeria, 1989. It is suggested that unlike S.51 and item 37 of the Nigerian (Constitution) Order –in- council, 1954 under which the then Western Region enacted the sale of goods law the present constitution precludes the states from legislating on sale of goods.
The draft on sale of goods is, again, a reproduction of the 1893 Act although some significant changes have been introduced. The most outstanding of these changes are considered in their appropriate places.
In addition to statutory provisions the common Law may also be applied to the sale of goods. Section 61(2) provides as follows:-
The rules of the common law, including the law merchant, save in so far as they are inconsistent with the express provisions of this Act, and in particular the rules relating to the law of principal and agent and the effect of fraud, misrepresentation, duress or coercion, mistake, or other intimidating cause, shall continue to apply to contracts for the sale of goods.
Thus the common law continues to be applicable to the sale of goods except where a rule of the common law is inconsistent with the provision of the statute.
1.2 Sales of Goods is an important aspect of contract. Indeed virtually all rules of contract, except those inconsistent with the provisions of the Sale of Goods Act, apply to sale of goods. And by all rules, one means both rules of common law and of equity. By virtue of the Sale of Goods Act however a number of terms and conditions are implied into a contract of sale of goods. These include terms as to fitness for purpose, description and delivery. These terms may however be excluded or modified under the 1893 Act whereas the 1979 Act which also incorporates the provisions of the Unfair Contract Act (U.K) of 1977 has now limited the ability of parties to exclude or modify some of the rights and duties implied under the 1893 Act.
1.3 Ingredient of sale of goods.
S.I(1) of the Sale of Goods Act 1893 defines sale of Goods as “a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a money consideration called the price” because Sale of Goods is a contract, it follows that all ingredients of a contract must be present: capacity of parties consideration, consent of parties, intention to create legal relationship and legality of object of the contract. But the consideration in a sale of goods transaction is narrowed down to money, not mere forbearance or a quid pro quo.
The two parties to a sale of Goods transaction are called the buyer and the seller. The seller is defined as a person who sells or agrees to sell goods and the buyer as a person who buys or agrees to buy goods.
Transfer of property is the ultimate goal of a contract of sale not the transfer of possession, and by property is meant ownership of the goods.
The sale of goods contract may evidence the actual sale of an existing goods or an agreement to sell goods yet to be produced. Hence the distribution between existing and future goods. Existing goods are those owned or possessed by the seller while future goods are those to be manufactured or acquired by the seller after the making of the contract of sale. A manufacturer of beer for example may agree to buy all the yield of a farmer’s cornfield over the next planting season. This would necessarily be a sale of future goods, since the goods are yet to be produced.
CHAPTER TWO
2.0 THE PLAINTIFF AND DEFENDANT (BREACH OF CONTRACT AGREEMENT)
In contract of any form, there must always a term of agreement which naturally recognized by law. In an account of breach of agreement or contract, either of the party will be force to seek for redress which usually done in the court of law. The plaintiff which can also be referred to as complainant will through his/her lawyer file a suit in the court of law and on the other side the defendant also file a counter suit through his/her council. The plaintiff is always the first to lodge complain at the appropriate quarter (usually at the court), while the defendant is the accused party.
In this context the genuiness of the agreement is very crucial, the parties to a contract must not only have agreed, but they must agreed freely, and the agreement must not have been secured either by some form of external compulsion, or by misleading statements made before the contract or on entirely wrong assessment of the situation. Contract made under any of the above circumstances would not be valid, though the exact effect of the situations described would vary. Summarily, contract is invalid if it’s made the following; (i) mistake (ii) misrepresentation (iii) Duress and undue influence. Example is in the case of Adams(plaintiff) V. Knoules and Foster the defendant gave to the plaintiff, who wanted to buy two ships from them, particulars in writing of these ships including a statement that the dead weight capacity of each ship was 460tons. The plaintiff, relying on these particulars, agreed to buy the ship and accordingly a memorandum of contract was prepared and signed by both parties through an agent. The memorandum made no reference to the particular earlier given to the buyer on delivery the ships were found to have a dead weight of 360 tons each. The court of Appeal held that the particulars were mere representation which may have induced the plaintiff to enter into the contract but which did not afford them any ground for a claim for damages for breach of contract.
2.1.1 The concept of “Goods”
“Goods” is defined in S.62 of the Sale of Goods Act as including “all personal chattels other than things in action and money and includes emblements, industrial growing crops and things attached to or forming part of the land which are agreed to be severed before the sale or under the contract of sale”
From the above definition, it follows that real property and chattel real (leasehold interest), chooses in action (e.g. negotiable instrument, shares and copyright) and money are not “goods” for the purposes of the Act Sand to be from the bottom of the sea, would however be purposes of the Act So also would industrial growing crops (emblement). An old coin or bank note, no longer legal tender, would also pass as goods if offered for sale as a curio.
For purposes of the passing of property in goods which is the subject matter of a sales contract the most important classification of goods is a “specific and unascertained" goods.
Specific goods are goods which are identified and agreed on at the time the contract of sale was made. For instance, parties may agree among themselves to transfer properly in a vehicle identified as Peugeot 505 Station Wagon registration number LA 1571" or "that car there in the second hand car showroom". Such accurate and descriptive identification of the subject matter of the transaction is what is meant by specific goods.
Unascertained goods on the other hand are goods of generic nature, described by the generic characteristic or the quantity of requirement. For instance, a buyer may want to buy "peugeot 505 station wagon car or "500 tons of wheat" or ten bags of cement" from a cement store. Until the ten bags are set aside from the lot they remain unascertained.
Future goods are generally unascertained goods, and until ascertained, property in them may not pass. But future goods may be specific. For example where a man pays for the yield of a particular cornfield.
2.1.2 Price is an essential element of a sale contract.
It is the consideration for the sale contract, and according to the Sale of Goods Act, it must always be in money term. Thus, barter trade or trade by exchange of goods is not governed by the Sale of Goods Act. But price may also be partly money and partly goods e.g. when a man trades in his old car for a new one and pays the difference in money term.
In Aldridge v Johnson (1857) the contract was for the exchange of fifty-two bullocks with one hundred quarter of barley, the difference in value to be made up in cash. This was accepted as valid contract of sale by the court
By Section 8 of the Sale of Goods Act, the price may (i) be fixed by the contract or (ii) be left to be fixed in a manner thereby agreed or (iii) may be determined by the course of dealing between parties or (iv) where no price is fixed as above, by payment of reasonable price depending on the circumstances of the case. This section presupposes that a contract of sale has been finally concluded.
In May and Butcher Ltd(plaintiff) v R (1934) X agreed to sell-goods to Y at a price to be agreed at a later date. There was a provision in the^ agreement that parties would further discuss the price to be paid. The House of Lords held here that parties were still negotiating and therefore no contract has been concluded. If nothing had been said about the price in this agreement the inference of a "reasonable price" would have been imported to the contract.
2.1.3 Conditional - Sale Agreement
These are sales under which the purchase price or part of it is payable "by installment. The buyer has possession, but property in the goods remains with the seller until all installments are paid. The buyer under a conditional sale is a buyer in possession. He can pass title to a bona fide third party who has no notice of the arrangement
2.1.4 Credit sales Agreement
Here possession of and property in the goods pass to the buyer even though he is yet to conclude payment for the goods.
CHAPTER THREE
3.0 REMEDIES OF PARTIES FOR BREACH OF CONTRACT OF SALE
Where, it is a condition of the sale that is breached, the aggrieved party can repudiate. If it is a warranty that is breached, he can only bring an action for damages. An aggrieved party may however choose to waive his right and adopt the transaction.
A breach may be caused by the seller or by the buyer. Where it is the buyer that causes the breach, the following remedies will be available to the seller.
(i) Where the property has already passed, the seller can sue for the price. (ii) Where property has not passed because the buyer wrongfully neglects or refuses to accept and pay for the goods, the seller can sue for damages. The measure of damages is the estimated loss directly and naturally resulting in the ordinary course of events (S 50.2). The seller is expected to explore alternative market to sell his goods, and if the pries he receives is lower than what he previously sold the goods for, he will be entitled to substantial damages. If, however, he can readily dispose of the goods on the market price equal to or higher than the contract price, he has suffered no loss. The cost of demurrage, storage or disposal incurred as a result of the rejection by the buyer will be taking into consideration in calculating the damages to be awarded.