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Formation of Contract of Sale

Posted by snowie , Thursday, April 22, 2010 1:41 PM

a) Formation
A contract of sale is made by an offer to buy or sell goods at a price and by the acceptance of such an offer: Section 5(1), Sales of Goods Act 1957. The contract may provide for the immediate delivery of the goods or the immediate payment of the price or both. Delivery or payment may even be by installments: Section 5(1), Sales of Goods Act 1957. Price means the money consideration for the sale of goods.

b) Formalities
A contract for the sale of goods can be made in any manner that shows agreement between the buyer and seller. A contract of sale may be made in writing or by word of mouth, or partly in writing and partly by word of mouth, or maybe implied from the conduct of the parties: Section 5(2), Sales of Goods Act 1957. There is an acceptance of goods when the buyers, either before or after delivery of the goods, expresses by words or conduct his assent to becoming the owner of those specific goods.

c Price
As seen earlier, a contract of sale is basically an offer to buy or sell goods for a price and the acceptance of such an offer. Price is the money consideration for the sale of goods. Where necessaries are sold and delivered to an infant, or to a person who by reason of mental incapacity or drunkenness is incompetent to contract, he must pay a reasonable price therefore. Price may be fixed in the following manner:
1.It may be fixed by the contract.
2.It may be left to be fixed in a manner agreed in the contract.
3.It may be determined by the course of dealing between the parties.
4.Where the price is not determined in any one of the aforesaid ways, the buyers must pay a reasonable price. What is a reasonable price is a question of fact dependent on the circumstances of each particular case: Section 9, Sale of Goods Act 1957.

d) Capacity of contract
The question of capacity to contract is regulated by the Contracts Act 1950. The legal principles and the law on contract governing capacity in ordinary contract law apply to contracts of sale. Capacity to buy and sell is regulated by the general law concerning capacity to contract, and to transfer and acquire property.