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Sales of Goods and



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Focus on two aspects
 The sale or other supply of goods
and services- the legal framework
 Undertakings and promises made
prior to the sale or other supply of
goods or services

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 The legal framework applying to
the sale or other supply of goods
and services

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Statutory framework
 Nineteenth century law merchant (UK)
provided for a legal framework for
contracts for the sale of goods (but not
in relation to the supply of services)
 These included implied terms in relation
 Title
 Quality
 And provisions relating to passing of
property etc
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And then
 Moves to codify/ rationalise these
in the Sale of Goods Act 1893
 However, this was only a
framework- always allowed the
parties to reach a different
contract (contract out of the Act)
 New Zealand adopted this Act in
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And then
 It became increasingly evident that the
Act had serious limitations
 Not suitable in an industrialised,
technologised economy with extended
distribution chains involving little
association between manufacturer and
user and little control for the retailer
 Specific-purpose statutes modified the
provisions in different situations, made
the Sale of Goods Act look increasingly
silly (egs: Hire Purchase Act 1971,
Contractual Remedies Act 1979)
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And then
 Proposals since 1972 to alter the
terms of the Sale of Goods Act to
meet current expectations,
particularly in relation to:
 Promises relating to title
 Promises relating to quality

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 Changes since 1972 but rather than a
complete revamp of the Sale of Goods
Act, the change has come through
several statutes- underlying ideas:
 Some contracting parties need protection,
others are powerful enough to make their
own deals
 The law needs to be consistent
 New Zealand should encourage
international trade
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So what do we have?

 Sale of Goods Act 1908- applies to
 Generally not affected by the CRA
 Consumer Guarantees Act 1993- largely
replaces the SoG in consumer sales
 However, SOG Act still relevant for
implied terms re passing of risk and
title, also perishing and where it is not
excluded (s56)
 Also, nb, the SoG (United Nations
Convention) Act 1994
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So what provisions are of
most importance?
 Title and perishing

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S8- idea of perishing of goods

 Not only destruction but also
where they are no longer fit for
their intended and obvious
 (nb- case of McRae v
Commonwealth Disposals
Commission (1951))

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Concept of property- inderlies
issues of title and risk
 Title
 Right of alienation or disposal
 Possession
 Risk
 Not all of these need to be in the
hands of the same person
 Nb concepts of “general” and
“special” property

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Nb title
 Condition that the Seller has the right to
sell the goods when title is to pass
 Meaning- not straightforward
 Niblett v Confectioners’ Material Co Ltd
 Nemo dat quod non habet- Rowland v Divall
(1923) (importance of the effect of the
breach)- now seen as voidable rather than
 Warranty of quiet possession- against
consequences of faulty title
 Warranty the goods are free of charge
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Passing of Property- specific
goods (s19)
 When parties intended property to pass
 S20, 4 rules that apply-
 if unconditional contract of goods in a deliverable
state, it is when the contract is made
 If something to be done before a deliverable state
is reached, property passes when the buyer
knows that has been done
 If something needs to be done by the seller to
ascertain the price, property passes when the
buyer knows that has been done
 If good provided on appro, property passes when
the buyer signifies approval or after a reasonable

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Passing of Property-
unascertained goods
 S18-when they are ascertained
and in a deliverable state
 Unconditionally appropriated with
concurrence of both parties
 Once identified and delivered without
reservation to the buyer or agent

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Rules in s20

 Normally all aspects of property will
pass at the same time
 All these rules do not apply if the parties
have expressed a contrary intention
 One obvious issue is reservation of title-
issues of right to sell, rights to proceeds
of sale and security interests

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S21(1)-Reservation of title

 The seller may reserve the right of
disposal until certain conditions are
fulfuilled- most likely of these is
payment- if the goods have been
wrongly sold, the seller is entitled to the
proceeds- Len Vigden Ski v Timaru
Marine Supplies (1986)
 More complicated form as used in the
Romalpa case- Aluminium Industrie
Vaassen BV v Romalpa Aluminium Ltd
(1976)- right to trace- buyer is the
bailee, agent orZealand
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Effect of Romalpa- added
 Ok if confined to tracing and right to
 But- difficulties if the goods extend to
 Re Bond Worth (1980) – Court held the
clause to be an unregistered charge- void
 Whenuapai Joinery v Trust Bank Central
(1994)- Court held the joinery had become
part of the real estate

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Romalpa Clauses- later
developments and
 Registration under the PPSA-
 Have a look here for a tutorial on how to
use the register:
 Will talk about this more in a couple of
 The PPSA will replace a romalpa clause
regime with a registrable charge regime
 Creation of a trust- put the money in
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An aside: the Sale of Goods
(United Nations Convention)
Act 1994
 Deals with issues of international sales
of goods
 Does not deal with passing of title or
 Provides for a core of consistent rules
about implied terms in such contracts,
ascertaining price and timing/durration
of offer, acceptance and valid contracts
 Provides for means of ascertaining the
“proper” law to settle disputes
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And consumer-related
legislation- why?
 Limited definition of “goods” – degree of
uncertainty with mixed contracts
 Ability to contract out
 Ignored the reality of retailers being
mere middlemen/distributors
 Dubious application and scope of the
implied terms in ss 15 and 16 (purpose,
merchantable quality and sale by
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What sort of supplies are
Supplies of gds and ss to consumers
Consumer?- a person acquiring goods
or services of a kind ordinarily
acquired for personal, household or
domestic use or consumption
Not where the acquisition is for:
• Resale
• Consumption in the course of
production or manufacture
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How is this status determined?
Objective- what would someone
ordinarily use these goods or
services for?
Subjective- what is this person
acquiring them for?
Nb-these are treated as
Nb- no specific limit on value
although value may be relevant for
determining purpose
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 Provider of gds or ss to a consumer in
the course of trade. The supply can be
by way of:
 Sale
 Exchange
 Lease
 Hire/hp
 Gift
 Provision or grant
 (nb does not apply to where a charitable
organisation distributes for the benefit of
the recipient)
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What happens if the Act
 The Act provides for implied terms
and for specific remedies
 Other legislation also applies if
relevant- eg Door to Door Sales
Act, Contractual Remedies Act

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 Goods- including land fixtures
 But does not include electrical
 Implied terms re goods can apply
even if that component was minor
(ie largely services)
 Second hand is included
 But not where auction or
competitive tender (s41(3))
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Next question: what are
the specific provisions?
 That is for next week along with an
examination of the pre-sale
protection given by the Fair
Trading Act 1986

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