SALES TRANSACTIONS SALE OF GOODS

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1 SALES TRANSACTIONS Sales transactions go beyond the traditional areas of sale of goods. Auction sales, hire purchase and conditional sales are other dimensions. The Sale of Goods Act, 1962 (Act 137) Section 4 with other Auction Sales Ordinances regulated auction sales until the promulgation of the Auction Sales Law, 1989 (PNDCL 230). The Sales of Goods Act in Sections 66 to 75 impacted on hire purchase until it was repealed by the Hire Purchase Decree, 1974 (NRCD 292). The Hire Purchase Decree in addition to hire purchase covers all other types of conditional sales. SALE OF GOODS Sale of goods is regulated by the Sale of Goods Act, 1962 (Act 137). The term goods includes all chattels personal. Chattels personal are distinguished from chattels real which are chattels attached to or forming part of the land. Goods are thus all tangible things except land and money. In a contact of sale of goods the seller agrees to transfer the property in the goods to the buyer for a consideration called the price. The price consists wholly or partly of money. The consideration for the sale must be money otherwise the contract is one of barter or exchange. The price may be fixed by the contract or may be determined by the course of dealing between the parties. In the absence of either of these the buyer must pay a reasonable price, the amount of which is determined by the circumstances of each particular case. A contract of sale may be between one part owner and another. A contract of sale may be absolute or conditional. Capacity to buy and sell is regulated by the general law concerning capacity to contract and to transfer and acquire property. A contract of sale of goods may be made in writing or by word of mouth or partly in writing and partly by word of mouth, or may be implied from the conduct of the parties. The main essence of the sale of goods is the transfer of property i.e. ownership in the goods from the seller to the buyer. Where the property in the goods is transferred at the same time as the contract of sale is concluded, the contract is called a sale. Where the property is to be transferred after the conclusion of the contract of sale the contract is called an agreement to sell. In Nanor v Auto Parts Ltd [1992] 2 GLR 273, the plaintiff entered into a contract with the defendants, a motor firm, to purchase a Nissan Homer bus. The plaintiff paid the purchase price and the defendants promised to deliver the vehicle within six months. They failed to deliver the vehicle on the due date. They subsequently demanded and received further payment from the plaintiff to take account of a change in the price of the vehicles which they claimed were being shipped to them. When the vehicles arrived five months later, the defendants refused to give one to the plaintiff on the ground that they were meant for other customers. The plaintiff thereupon brought an action against them for an order for specific performance of the contract or in the alternative damages for breach of contract. In their defence the defendants contended that the contract was not concluded because the plaintiff had not paid the full purchase price and besides they did not give any delivery date for the vehicle. It was held that under section 1(1) of the Sale of Goods Act, 1962 (Act 137) a contract of sale of goods was one whereby the seller agreed to transfer the property in the goods to a buyer in 1

2 consideration of a price consisting wholly or partly of money. And under section 6(1) of Act 137 the price might be fixed by the parties or might be determined by the course of dealing between the parties. Accordingly, since the parties were agreed that the plaintiff offered to buy and the defendants promised to sell him a Nissan Homer bus, the mere fact that there was a dispute over the price and delivery date did not invalidate the contract. When property passes from the seller to the buyer depends on the nature of the goods. Goods may be specific, ascertained, unascertained or future goods. Specific goods are goods identified and agreed upon at the time of the contract of sale. The property passes when the contract is made but where the seller of the goods is bound to put them in a deliverable state, property does not pass until this is done and the buyer notified. Where the goods are to be weighed, tested or measured, property does not pass until this is done and the buyer notified. Where goods are supplied on sale or return or approval, property passes when the buyer signifies his approval or does any other act adopting the transaction. Ascertained goods are goods identified and agreed upon after the making of the contract. The goods are identified in a warehouse, separated from the bulk and labelled as the buyer s. The goods become ascertained after that. The property passes when the parties intend it to pass. Unascertained goods are goods which have not been specified. They are goods which the buyer has agreed to purchase but which are still part of a larger bulk. No property passes until the goods are ascertained in a deliverable state and unconditionally appropriated to the contract. Future goods are goods to be manufactured or acquired by the seller after the making of the contract of sale. As a general rule future goods will be unascertained. DUTIES OF THE SELLER The fundamental obligation of the seller is to deliver those goods to the buyer. In a sale of unascertained goods the fundamental obligation of the seller is to deliver to the buyer goods substantially corresponding to the description or sample by which they were sold. There is an implied condition on the part of the seller that in the case of a sale, the goods are in existence and he has a right to sell at the time when the contract is made. There is also an implied warranty that in the case of an agreement to sell he will have a right to sell the goods at the time when the property is to pass. In a contract for the sale of goods by description or by sample there is an implied condition that the goods shall correspond exactly with the description or where by sample shall correspond exactly with the sample. Under section 13(1) of Act 137 or any other enactment there is no implied warranty or condition as to the quality or fitness for any particular purpose of goods supplied under a contract of sale. The exception is that there is an implied condition that the goods are free from defects which are not declared or known to the buyer before or at the time when the contract is made. There is no such implied condition where examination should have revealed any defects to the buyer. In Rockson v Armah [1975] 2 GLR 116, the appellant sold a second-hand Mercedes Benz car to the respondent for 3, The respondent made cash payments of 2,

3 and remitted two post-dated cheques of each for the balance of the purchase price. Upon delivery the car was found to have been involved in an accident and had suffered considerable damage. The appellant accepted liability and agreed to repair the car. Consequently the appellant approached Messrs. R.T. Briscoe to effect the repairs but found their estimates too high. The car was eventually repaired by a "wayside" fitter in a day and the respondent took delivery. However, after the respondent had used the car for almost two months he repudiated the contract on the ground that he had discovered some latent defects in the car. The learned trial judge held that the respondent was justified in repudiating the contract. On appeal against this decision, the main issue for the consideration of the court revolved around the right of a purchaser to repudiate a sale upon the discovery of latent defects. It was held allowing the appeal that the election to abide by the contract of sale depended upon the damaged car being put in as near as possible the condition it was previously. Therefore if after it had been repaired, the car still retained latent defects it could be rejected on the ground that it was fundamentally different from what was bargained for. However the right to reject was lost by unreasonable delay. What amounted to reasonable time was a question of fact and might vary with the circumstances of a case; but retention of a second-hand car for almost two months was unreasonable and it was not thereafter open to the respondent to avoid the transaction. It was also held that time was a material element for consideration in a contract of sale, since it was an element in the determination of the question whether property in the goods had passed. A long period of retention must be equated with acceptance, the transfer of the property in the goods and the assumption of all risks. It was again held that the class of the goods and the status of the parties ruled out any obligations as to conditions or warranties being incorporated into the contract of sale and even if it were assumed that the subsequent state of the car at the time of sale constituted a breach of condition the respondent must be presumed to have waived his right by keeping the car for too long. On delivery to a buyer of quantity less than contracted for, the buyer has a right to reject or accept and pay the contract rate. Where a larger quantity is delivered the buyer may accept what should have been delivered and reject the remainder. The buyer may recover damages from the seller representing the cost, if any, of separating the goods which should have been delivered from the remainder. Where the buyer accepts all he must pay for the extra at the contract rate. Where the seller delivers to the buyer the goods he contracted to sell together with uncontracted goods of different description, the buyer may accept all the goods delivered and pay a reasonable price for the extra. Where the goods are less than the quantity contracted for the buyer may reject the whole or accept the goods included in the contract and reject the remainder. The buyer may recover damages from the seller representing the cost, if any, of separating the goods included in the contract from the remainder and also damages in respect of any deficiency in the goods delivered. 3

4 Unless otherwise agreed the seller must be ready and willing to deliver the goods in exchange for the price. If no time is fixed for delivery, delivery must be within a reasonable time. Unless there is a contrary intention, stipulations as to the time of delivery are conditions of a contract of sale. Failure to make delivery by that date is a breach of condition which entitles the buyer to repudiate the contract and sue for nondelivery. Unless otherwise agreed, the expenses and incidentals in respect of putting the goods into a deliverable state must be borne by the seller. Delivery means the voluntary transfer of possession from one person to another. The delivery may consist of physically handing over the goods, handing over the means of controlling the goods, transferring documents of title or where the goods are in possession of a third party, on acknowledgement by the third party that he is holding the goods on behalf of the buyer. In the absence of any agreement to the contrary the place of delivery is the seller s place of business but if he does not have one his residence. In the case of specific goods where the parties at the time of the contract knew that the goods were at some other place, then that place is the place of delivery. DUTIES OF THE BUYER The fundamental obligations of the buyer in a contract of sale are to pay the price and accept delivery of the goods. Thus the buyer must be ready and willing to pay the price in exchange for delivery of the goods unless otherwise agreed. Unless otherwise agreed stipulations as to the time of payment or as to the time for accepting delivery are not conditions of a contract of sale. Again unless otherwise agreed, the buyer is not bound to accept delivery of the goods by installments. TRANSFER OF PROPERTY It is important to ascertain exactly when the property in goods passes from the seller to the buyer because risk normally passes with ownership. However, the rules relating to the transfer of ownership depend on the type of goods. Where there is a contract for the sale of unascertained goods no property in the goods is transferred to the buyer unless and until the goods are ascertained. Section 26(1) of Act 137 provides that the property in goods passes under a contract of sale when the parties intend it to pass. Section 26(2) stipulates that unless a different intention appears the property in the goods passes under a contract of sale when they are delivered to the buyer. Where goods are delivered to the buyer on approval then in the absence of a contrary intention the property passes to the buyer when he signifies his approval or acceptance to the seller or does any other act adopting the transaction. The property still passes if the buyer does not signify approval or acceptance to the seller but retains the goods without giving notice of rejection on the expiration of a fixed time or if no time is fixed on the expiration of a reasonable time. 4

5 TRANSFER OF RISK The risk in the goods in a contract of sale is transferred to the buyer when the parties intend it to be transferred. In the absence of other intention, the goods are at the seller s risk until the property in them passes to the buyer after which the goods are at the risk of the buyer. Where there is any loss, damage or deterioration due to a delay caused by either the buyer or seller the party at fault will bear the risk. SALE BY A PERSON NOT THE OWNER Where goods are sold by a person who is not the owner and who does not sell them under the authority or with the consent of the owner the buyer acquires no better title than the seller had. This is the nemo dat quod non habet rule which means that a person cannot give what he or she has not got. The buyer will be obliged to give the article up to the true owner generally without any recompense from him. An innocent purchaser will be entitled to be recompensed to the extent that he spent money improving the goods before he discovered they were not his. There are several exceptions to the rule. Disposition by a mercantile agent in possession of the goods or its title with the consent of the owner is a valid transfer. By estoppel if the true owner stands by and allows an innocent buyer to pay over money to a third party, who professes to have the right to sell an article, in the belief that he is becoming the owner of it, the true owner will be estopped from denying the third party s right to sell. If the seller has a voidable title to goods and his title has not been avoided at the time of the sale, the buyer acquires a good title to the goods provided that he did not know of the seller s defect of title and bought in good faith. Where the sale is authorized by the courts and where the disposition is by a seller in possession or by a buyer in possession. REMEDIES OF THE SELLER The seller has two remedies available to him. These are personal remedies against the buyer himself and real remedies against the goods. His personal remedies are action for price and damages for non acceptance. Lien, stoppage in transit and right of resale constitute his real remedies. Where the sale is of specific goods and property has passed to the buyer and the goods delivered to him, the seller has relinquished all right to look to the goods for his price and he is relegated to his personal right of action against the buyer. However it is possible for the parties to provide by express agreement that the property in the goods is to remain in the seller even after they have been delivered in which case the seller may have the right to seize or reclaim the goods in certain events. There may be an agreement to sell unascertained goods in which no property has yet passed and in which there is no obligation to deliver any particular goods. There are no special provisions needed in this situation since the seller clearly has full power to exercise any control over the goods and such exercise cannot be a breach of contract. Under such circumstances, the seller is entitled to the remedy of recovering possession of the goods. This remedy is not usually recommended since it may lead to a breach of the peace. 5

6 The unpaid seller has a right to a lien on the goods. A lien is a right to retain possession of goods but not to resell them until the contract price has been paid. It is available in any of the following circumstances: Where the seller has not agreed to deliver the goods before payment of the price; where the goods have been sold on credit but the period of credit has expired and where the buyer has become insolvent. The seller will lose his right of lien if the price is paid or tendered or the buyer obtains possession of the goods. The seller cannot exercise this right if he has handed the goods to a carrier for transportation to the buyer without reserving the right of disposal or where he has given up the right (waiver) The right of the seller to stop goods in transit to the buyer, regain possession of them and retain them until payment has been received, is exercised especially when the buyer becomes insolvent. An unpaid seller may recover possession of the goods from the buyer after they have been delivered to him if the property has not passed to the buyer or the property has passed to the buyer but the contract expressly confers a right on the seller to recover possession. An unpaid seller who is in possession of the goods is entitled as against the buyer to resell them where they are of a perishable nature and the buyer does not within a reasonable time pay or tender the price. It may also be where the buyer has repudiated the contract and the seller has accepted the repudiation or where the seller gives notice to the buyer of his intention to resell and the buyer does not within a reasonable time pay or tender the price. In the sale of specific goods where the property has passed to the buyer but the goods have not yet been delivered whether the goods are still in possession of the seller or have been dispatched to the buyer but not yet reached him, the law confers on the seller subject to certain conditions, the power to resell the goods and pass a good title to a third party as well as some incidental powers and the right to do so vis a vis the first buyer. The seller often has the power to pass a good title to a bonafide transferee without having the right to do so. Thus the resale may constitute a breach of contract as against the first buyer although it validly transfers the property. Where there is an agreement to sell specific or unascertained goods in which no property has yet passed but in which the seller is under a personal obligation to deliver certain particular goods and no others, the law does not need to confer a power of resale on the seller because he still has the property in the goods and can transfer a good title to another buyer. But it does not follow that the seller does not need statutory protection from the consequences of exercising this power. For example, if the buyer defaults in payment of the price on the date agreed, the seller, being still the owner of the goods has power to resell them and the incidental powers of retaining them or recovering them from a carrier but the exercise of these powers might be a breach of contract. 6

7 REMEDIES OF THE BUYER Various remedies are available to the buyer, where the seller is in breach of contract. The buyer is entitled to repudiate the contract and reject the goods where the seller is in breach of a condition of the contract. Where goods are delivered to the buyer and he rejects them, having the right to do so, he is not bound to return them to the seller, but it is sufficient if he intimates to the seller that he rejects them. The buyer may not reject goods which he has accepted. The buyer is deemed to have accepted the goods when he intimates to the seller that he accepts them or does not within a reasonable time after delivery of the goods inform the seller that he rejects them or he wrongfully refuses or neglects to place the goods at the disposal of the seller after notifying the seller that he rejects them. The personal rights of the buyer include action for damages for breach of contract. It may be an action for damages for non-delivery or it may be an action for damages for breach of a term in respect of goods which have been delivered. In Nanor v Auto Parts Ltd (supra) it was held that since there was no evidence that the plaintiff was unwilling to pay additional sums and yet the defendants refused to deliver the vehicle to him, the defendants were in breach and accordingly the plaintiff was entitled to treat the contract as at an end. If the buyer has paid in advance and the goods are not delivered, he can recover the amount paid because there has been a total failure of consideration. Again in Nanor v Auto Parts Ltd. (supra), it was held that by the provisions of section 57(1) and (2) of Act 137 the plaintiff was entitled to receive all moneys he had paid to the defendants. Furthermore he was entitled to general damages for the breach and damages for loss of use. Under section 54 of Act 137 the measure of damages in actions for nondelivery was the loss which could reasonably have been foreseen as likely to result from a breach of contract. Accordingly, where there was an available market for the goods, the buyer would be entitled to the difference between the market or current price (including the black market or kalabule market price) and the contract price at the time stipulated under the contract for delivery. The buyer may sue for specific performance but only in cases where the goods are specific or ascertained and where monetary damages would not be an adequate remedy. Contracts for the international sale of goods are entwined with other contracts. These other contracts include the contract for the carriage of goods by whatever means agreed, the contract of insurance, and perhaps a contract with a bank or banks under which payment for the goods is to be effected. In many export transactions the delivery of shipping documents to the buyer or the agent of the buyer plays an important role in the performance of the transaction. The rights and duties of the parties in such transactions will vary according to the arrangements they have made regarding the place of delivery, the transportation of the goods and the method of payment of the purchase price. Mercantile custom has developed a number of trade terms and described methods of performance of export transactions. Terminologies like c.i.f - cost, insurance and freight; f.o.b. - free on board; f.o.r free on rail and f.a.s free alongside are worthy of note. The special trade terms are designed to define the method of delivery of the 7

8 goods sold and also used to indicate the calculation of the purchase price and in particular the incidental charges included. The seller when quoting f.o.b. will ask for a lower price than when quoting c.i.f because in the latter insurance and freight charges would be included in the purchase price whereas in an f.o.b. contract they are not. A bill of lading is also of much significance. In Mabbs Co. Ltd. v. Roro Services (Ghana) Ltd. and Another [1991] 1 GLR 435, the plaintiff (Mabbs) entered into an agreement to purchase 600 Dunlop tyres from Madero Trading Inc. in the U.S.A. at a total price of US$117,992 on a 90-day credit facility. The completion of the contract was made conditional on the plaintiff providing a bank-to-bank guarantee for the payment of the price. Pending receipt of the guarantee Madero authorised shipment of the tyres to Ghana under a bill of lading consigned to Madero/Mabbs." The principals of the defendants as carriers accordingly shipped the tyres to Ghana and they were received into the custody of the defendants. Madero then dispatched a photocopy of the bill of lading to the plaintiff who then obtained the captain's copies of the bill of lading (exhibits B and C) from the defendants. Madero had indorsed each bill to the effect that the goods were only to be released "against presentation of our duly indorsed original Container Lines bill of lading." After the plaintiff had completed all customs formalities, the defendants refused to deliver the goods to him except upon his production of the original bill of lading and an attested invoice. Since the plaintiff was unable to provide the bank-to-bank guarantee Madero informed the defendants that they had cancelled their contract with the plaintiff and had accordingly stopped delivery. Subsequently, the plaintiff brought an action, inter alia, for an order directing the defendants to deliver the tyres to him. It was held that by handing the captain's copies of the bill of lading (exhibits B and C) to the plaintiff, the defendants acknowledged to the plaintiff in terms of the provisions of section 39(1) and (3) of the Sale of Goods Act, 1962 (Act 137) that they were holding the tyres as bailees of the plaintiff. But that acknowledgment was subject to the indorsements on the bill of lading which required the defendants to deliver the tyres only upon production by the plaintiff of the originals of the shipper's bill of lading. Accordingly, the plaintiff accepted the defendants as his bailees upon the conditions indorsed on the bill of lading. In the result, the plaintiff had no cause of action against the defendants when they rightly demanded the originals of the bill of lading because in spite of the general rule that the carrier had a duty to deliver the goods to the person he had contracted with the shipper to deliver them, it was clear from the authorities that the bill of lading was the consignee's document of title to the goods and a carrier was therefore liable if he delivered the goods without seeing the bill of lading or if he delivered the goods to an unauthorised person. Accordingly, the demand to see the original of the bill of lading was a necessary precautionary measure to ensure that the goods went to the right person. Also having regard to the conditions indorsed on the bill of lading, transit did not end by the defendants' acknowledgment that they were bailees of the plaintiff because in terms of the indorsement the goods could change their course if the conditions were not satisfied. Furthermore, since the plaintiff failed to satisfy the bank-to-bank guarantee for the payment of the tyres demanded by Madero, Madero answered to the description of "unpaid seller" in terms of section 40 of Act 137 and they were therefore entitled to alter their instructions to the carriers by authorising delivery of the goods to another consignee. The plaintiff s claim was therefore not competent. 8

9 HIRE PURCHASE An agreement under which an owner lets chattels of any description out on hire and further agrees that the hirer may either return the goods and terminate the hiring or elect to purchase the goods when the payments for hire have reached a sum equal to the amount of the purchase price stated in the agreement or upon payment of a stated sum. The essence of the transaction is therefore a bailment of goods by the owner to the hirer and an agreement by which the hirer has the option to return or purchase the goods at some time or another. Its object is to ensure that until the full price is paid the property in the goods remains in the owner, and in such a way that the hirer will normally be unable to pass a good title to a third party during the continuance of the bailment. In Ghana Hire Purchase is regulated by the Hire Purchase Decree, 1974 (NRCD 292). A hire purchase agreement must be in writing and signed before it can be enforceable by the owner or seller. Before any agreement is made the seller or owner shall state orally and in writing to the prospective buyer or hirer the price at which the goods may be purchased by him for cash (cash price) and the hire-purchase or total purchase price. Every agreement shall contain: a statement of the cash price and the hire-purchase price or total price, the amount of each installment by which the price is to be paid and the date or mode of determining the date upon which each installment is payable, a description or list of the goods to which the agreement relates sufficient to identify them, a notice on the right of hirer to terminate agreement and restriction on owner s right to recover goods. A copy of the agreement shall be delivered or sent to the hirer or buyer within 14 days after the making of the agreement. At any time before the final payment under a hire purchase agreement falls due the hirer or buyer shall be entitled to terminate the agreement by giving written notice of termination to any person entitled to receive payments under the agreement. Where the hirer or the buyer terminates the agreement other liabilities accrued before the termination apart, he shall be liable to pay the difference between the total sums paid and one half of the hire purchase or total purchase price or a lesser amount if the agreement specifies one. On such termination, the hirer or buyer shall return the goods at his own expense to the premises from which they were originally supplied to him or any other place the owner or seller may direct. Where the goods are sent to such other place the owner or seller shall at his own expense provide for any additional expense incurred in returning the goods. On such termination if the hirer or buyer failed to take reasonable care of the goods he shall be liable to compensate the owner or seller for any loss or damage caused. 9

10 The hirer under a hire-purchase agreement or the buyer under a conditional sale agreement may give notice in writing to the owner or seller of his intention to complete the purchase of the goods by paying or tendering to the owner or seller on a specified day the net balance due under the agreement. The net balance due is the hire-purchase price or the total purchase price originally payable under the agreement less any amounts paid or provided. The rights conferred on the hirer or buyer may be exercised by him at any time during the continuance of the agreement or within 28 days after the owner has taken possession of the goods (during which period the owner shall not be entitled to dispose of the goods) upon paying or tendering to the owner in addition to the net balance due-the reasonable costs incurred by the owner in and incidental to taking possession of the goods and any amount properly expended by the owner on the storage, repair or maintenance of the goods. PROTECTED GOODS Protected goods are goods that have been let under a hire-purchase agreement or sold under a conditional sale agreement, that one-half of the hire-purchase price or total purchase price has been paid or tendered by or on behalf of the hirer or a guarantor and that the hirer or buyer has not terminated the hire-purchase agreement or conditional sale agreement or the bailment in the case of the hire-purchase agreement. The owner or seller shall not enforce any right to recover possession of protected goods from the hirer or buyer except by an action. Where the owner or seller recovers possession otherwise, the hirer or buyer shall be released from all liability under the agreement and shall be entitled to recover from the owner or seller in an action for money had and received, all sums paid by the hirer or buyer and any security given by him in that respect. Any guarantor is also entitled to such recovery. The Court may upon application by the hirer or buyer make an order for the return of the goods to the hirer or buyer and for the rescheduling of payments due under the agreement. The hirer or buyer of goods under a hire-purchase or conditional sale agreement shall not remove the goods from Ghana without the written consent of the owner. In Transport Hire Purchase Ltd v Dede [1992] 2 GLR 58, the plaintiff company sold a Toyota truck to the defendant under a hire-purchase agreement. The stated purchase price, ie the cash price was 750,000 and the-hire purchase price was 1.4 million. Clause 11 of the hire purchase- agreement reserved in the plaintiff the right to seize the vehicle when the defendant defaulted in the payment of any monthly instalment. In a purported exercise of that right the plaintiff subsequently impounded the vehicle. He then later brought an action for an order for the return of the vehicle. The defendant resisted the claim and in turn counterclaimed for the refund of the sum of 715,000 she alleged she had paid to the plaintiff in respect of the vehicle and other moneys she had expended on repairing and in insuring the vehicle; and an order for a lien on the vehicle until the plaintiff had paid those sums. In support of the claim for refund of expenses on repairs and insurance, the defendant contended that the plaintiff was not entitled under the Hire- 10

11 Purchase Decree, 1974 (NRCD 292) to have added expenses not made at the time of sale to the purchase price. The court found that (i) it was the plaintiff who authorized the defendant to make those expenses; (ii) at the time the plaintiff impounded the vehicle the defendant had made total payments of 721,400 in respect of the vehicle; and (iii) the defendant had not terminated the agreement at the time the plaintiff seized the vehicle. It was held, section 2 of the Hire-Purchase Decree, 1974 (NRCD 292) required that before a hire-purchase agreement was executed the seller should state both the cash price and the hire-purchase price orally and in writing to the buyer or hirer. No provision however made it unlawful to add intended expenses or expenses not made at the time of the sale to either the cash price or the hire-purchase price. Accordingly, in the instant case, even though the hire purchase agreement provided that the cash price was 750,000 and thehire purchase price was 1.4 million the inclusion by the plaintiff of additional expenses for insurance and repairs in the selling price was lawful. Section 23 of NRCD 292 clearly permitted the parties to a hire purchase-agreement to vary their rights, duties and liabilities by express agreement or by a course of dealing between the parties or by custom which the parties might be taken to have agreed to be applicable to their agreement. Accordingly clause 11 of the hire-purchase agreement which reserved in the plaintiff the right of seizure on default by the defendant to pay any monthly instalment was lawful. However, the power of variation was subject to other provisions of NRCD 292. Section 17 of NRCD 292 mandatorily demanded that before the right of, inter alia, forfeiture or repossession could be exercised by the plaintiff it should have (a) made a written demand to the defendant to pay the arrears of the instalments; and (b) given the defendant fourteen days from the service of the demand before taking steps to respossess the vehicle should the defendant fail to comply with the written demand. Since the plaintiff failed to comply with those statutory provisions, the seizure was unlawful. Accordingly, the plaintiff was not entitled to an order that the vehicle be returned to it. The plaintiff s right of repossession was also subject to section 8(1) of NRCD 292 which prohibited any seller or hirer from enforcing any right to recover possession of protected goods from the hirer or buyer otherwise than by action. Section 8(4) defined protected goods as (i) goods acquired under a hire-purchase or conditional sale agreement; (ii) onehalf of the total purchase price of which have been paid or tendered on behalf of the buyer or guarantor; and (iii) the agreement between the parties had not been terminated by the seller. Section 8(2) provided very grave sanctions against a seller who violated the provisions of section 8(1) of NRCD 292. On the evidence the defendant had paid more than 50 per cent of the total purchase price and consequently the vehicle was a protected good. Accordingly, the defendant was entitled under section 8(2) of NRCD 292 to a refund of all the moneys she had paid to the plaintiff and a release from all her liabilities under the agreement. 11

12 AUCTION SALES The Auction Sales Law, 1989 (PNDCL 230) regulates auction sales in Ghana. Under the law there is an Auctioneers Registration Board which has the power to grant auctioneers licences, register auctioneers, revoke or suspend such licences and set standards for the conduct of auctioneering. Every auctioneer shall give notice of his place of business and the particulars of sale. Before the commencement or during the time of any auction sale the auctioneer shall display in a conspicuous part of the place where an auction is being held notice containing his full name and residence or the name of his firm and the office address written in large letters so as to be publicly visible and legible. There should also be a clear description giving particulars of the quality and quantity of the items intended to be auctioned. Suspension or revocation of a licence renders it of no effect. Every auctioneer shall at the request of the owner of any property undertake the sale of the property and shall sell such property within such time as the owner may require or as soon as possible. Nothing restricts an auctioneer from selling at the same time the properties of more than one owner if those properties are lotted consecutively and in such manner that no property of one owner shall become mixed with the property of another owner. The advertisement of an auction is merely an invitation to treat. In the absence of fraud any intending purchasers who attend an auction have no right of action if the property is not put up for sale or where the property put up for sale is withdrawn. An auctioneer can be sued in tort for fraudulent misrepresentation that he is authorized to sell when he is not. Goods put up for sale in lots at an auction are deemed to be the subject matter of a separate contract of sale. A bid is a mere offer and may be retracted by the bidder at any time before the auctioneer announces the completion of the sale and until the property is actually knocked down, there is no complete contract of sale. The sale is completed for each lot with the customary fall of the hammer. Property in the goods then passes. Where a sale is without reserve the highest bidder shall be entitled to buy the goods even if the auctioneer refuses to accept his bid or to complete the sale. A vendor may withdraw the property from the auction and the auctioneer has an obligation to withdraw the goods unless the sale is subject to a reserved price which has not been attained. A reserved price is the minimum price below which the goods cannot be sold. Where a sale is subject to a reserved price the auctioneer or his representative may make one bid which shall be openly declared before other bids are taken. A sale shall not take place if the highest bid is lower than the reserved price unless the auctioneer has authority to accept such a lower bid. Where the goods to be sold by auction are not perishable or damaged goods the auctioneer shall give not less than seven days notice of sale to the District Chief Executive of the district where the sale is to take place. A notice of sale shall state the time and place of the sale and give a catalogue of the goods to be sold. The auctioneer 12

13 shall exhibit in the district, copies of the notice conspicuously for two days at no less than three public places. The auctioneer shall ensure that notice of the sale is given on the day of the sale through the beating of a drum, gong - gong or such other means of communication as may be appropriate to the area. An auctioneer cannot sell spirits for which licence is required but can sell for an owner who is licensed to sell liquor. An auctioneer can sell firearms and ammunition without being registered as a firearms dealer. He only has to obtain a permit for that from the Inspector General of Police. There can be no sale of any land by auction unless the auctioneer has given at least twenty one (21) days public notice of the sale at the major town of the district in which the land is situated and also at the place of the intended sale. The notice shall state the name and place of residence of the vendor and shall be in writing or other means of communication. The auctioneer shall state the particulars or conditions of sale by auction of any goods or land. Whether sale is without reserve or subject to a reserved price and whether a right to bid is reserved by the vendor. Where the auction sale is as a result of a judgment debt, the sale shall be subject to a reserved price determined by the court which gave the judgment. An auctioneer shall within seven (7) days after every auction sale furnish a complete account of the sale verified by him by statutory declaration to the District Chief Executive of the district specifying the price at which each lot was sold. An auctioneer making any sale by auction shall, unless it is agreed otherwise between him and the vendor, be entitled to sue for the recovery of all sums and the discharge of all liabilities due in respect of such sale. An auctioneer is normally liable for the due payment to the vendor of the net proceeds of every sale within ten (10) days from the date of such sale. The employment of an auctioneer to sell any property by public auction does not authorize him in case the public auction fails to sell by private auction. An auctioneer may sell his own property as principal in which case he may not disclose the fact that he is selling as principal. An auctioneer is the agent of only the vendor where he sells as an agent except that for the purpose of signing the contract the auctioneer shall also be the agent of the purchaser. The agency of the auctioneer is an agency for sale by auction only. The authority of an auctioneer may be revoked either expressly or in any of the circumstances in which an agreement may ordinarily be terminated. The authority of an auctioneer mat be withdrawn notwithstanding that he has advertised the property for sale and incurred expenses in respect of that intended sale. The auctioneer is a bailee for reward and shall exercise ordinary care and skill in keeping the goods entrusted to him. An auctioneer on demand by the vendor shall redeliver the vendor s goods to him except where his right of lien exists. The auctioneer shall sign a proper contract binding the purchaser and if he fails to do so shall be liable to the vendor for it. The purchase of any property at an auction by the auctioneer himself without the vendor s consent shall be voidable and may be set aside at the instance of the vendor unless there is evidence of acquiescence. An auctioneer shall account for any moneys 13

14 received by him on behalf of the vendor and shall pay such money to him. The remuneration of an auctioneer for selling any property by auction shall not exceed seven (7) per centum on the gross amount of sale. An auctioneer has a lien by the custom of his business on goods entrusted to him for sale and on the deposit and purchase money for his charges and remuneration. The vendor shall indemnify the auctioneer for any expenses incurred or damages sustained by him in the ordinary course of his employment. Where an auctioneer sells property without or in excess of his authority, he shall be liable to the purchaser for breach of warranty of authority. The purchaser is entitled to sue the auctioneer personally for any fraud to which the auctioneer is privy. An auctioneer shall open and keep a separate account of his client s money. In Zakari v Nkusum Mart [1992] 1 GLR 1, in execution of a judgment debt obtained by the National Savings and Credit Bank against the applicant, his house was sold at a public auction by the respondent, the auctioneer, to one N for 3,800,000. N however was unable to pay the purchase price. A second auction organized by the respondent failed because no one attended it. At the third auction the house was purchased by one A for 2,480,000. Subsequently the applicant brought the instant application to set the sale aside on the grounds that (a) the sale was irregular because no fresh notices were published or served on him after the first abortive sale; (b) he had suffered damage, ie a monetary loss as a result of the non-publication because while N had offered 3,800,000 for the house, A had purchased it at the low figure of 2,480,000; and (c) in the circumstances of the sale to N, the bank was restricted to seeking damages or exercising its right of action against the respondent under section 26(3) of the Auction Sales Law, 1989 (PNDCL 230). The court found on the evidence that (i) the applicant did not place any value on the house but the reserved price for the sale was 2,286,972.46; and other matters. It was held dismissing the application that as provided by section 28 of the Auction Sales Law, 1989 (PNDCL 230), an auction sale was completed when the auctioneer announced its completion by the fall of the hammer or in any other customary manner. Accordingly, section 26(3) obliged the auctioneer to sign a contract binding the purchaser or be liable to the vendor for any damages sustained as a result of his neglect. And section 36(4) empowered the auctioneer to maintain an action in his own name for the price of the goods. However, since on the evidence N was a man of straw, it would serve no useful purpose for the respondent to maintain an action against him. Since the auction was completed on 20 March 1990, notwithstanding the fact that neither the respondent nor the vendor availed themselves of the remedy under section 26(3) of PNDCL 230 by suing N for the purchase price, the subsequent sale to A was a resale and not a postponement of the earlier sale. In the circumstances the property remained under attachment and under both Order 51, r 15 of the High Court (Civil Procedure ) Rules, 1954 (LN 140A) and section 16(1) of PNDCL 230, the respondent should have given not less than 21 days fresh public notice of the subsequent sale. The failure to post fresh public notices therefore amounted to a material irregularity in the conduct of the sale which could have enabled the applicant to set the sale aside. However, Order 51, r 18 of LN 140A required that he should prove to the satisfaction of the court that he had sustained substantial injury by reason of the irregularity. But the purpose of the auction 14

15 sale was not to enrich the judgment debtor and therefore provided the reserved price was obtained, what was left to the judgment debtor was of no consequence. Besides, in the absence of collusion or fraud, the smallness of the amount realized at the sale was not in itself a ground for setting a sale aside. Accordingly, since the applicant was unable to show to the satisfaction of the court that he got that low sum because of the lack of notice; and that there was fraud and collusion in the low turn out and the low offer made, he failed to establish a nexus between the irregularity and the injury he complained about. Accordingly, he failed to vitiate the sale. Although the purpose of the notice was to protect the true owner from having a sale of the property behind his back; and also to draw as many people as possible to the sale for competitive bidding and a reasonable price offer, the rules did not require that notices be served personally on the judgment debtor. An irregular auction was voidable, and under Order 51, r 18 of LN 140A any person damnified by it was entitled to bring an application within 21 days of the sale to have it set aside. Where no such application was brought, then under Order 51, r 19 of LN 140A the sale became absolute. Since the applicant s application was woefully out of time and he did not seek an enlargement of time, his application would be dismissed. 15