Sale of goods

Habari Year 2! Let's Talk Business!

Ever bought a new pair of shoes from Bata? Paid for airtime at the local duka? Maybe you've used M-Pesa to buy a phone online from Jumia? If you've done any of these things, congratulations! You are already a participant in the world of Commercial Law, specifically, the Sale of Goods. It might sound like a heavy topic, but trust me, it’s all around us every single day. Today, we're going to break it down, make it simple, and see how the law protects you whether you're buying a single mandazi or a brand new car. Let's dive in!

What Exactly is a 'Contract for the Sale of Goods'?

At its heart, this is the legal agreement that makes the world of commerce go 'round. The Kenyan Sale of Goods Act (Cap 31) gives us a clear definition. It’s a contract where a seller agrees to transfer the property (ownership) in goods to a buyer for a money consideration called the price.

Let's break down the key ingredients:

• Seller: The person selling the goods. (e.g., The supermarket, the mama mboga)
• Buyer: The person buying the goods. (That's you!)
• Goods: These are tangible, movable items. This includes everything from a pen, a cow, a car, to a computer. It does NOT include land or buildings (that's property law) or services (like getting a haircut).
• Property: This is the most important word! It doesn't just mean the physical item, it means ownership. The goal is to transfer the legal title from the seller to you.
• Price: It has to be money. You can't legally have a "sale of goods" by swapping your laptop for a goat. That's a barter trade, a different kind of contract!

Example: Wanjiku walks into a Naivas Supermarket. She picks a loaf of bread (the goods), takes it to the cashier (the seller's agent). The price is KES 60 (the price). Wanjiku (the buyer) pays the KES 60. The moment the cashier accepts her money, the ownership (property) of the bread transfers to Wanjiku. She can now walk out with it. That's a perfect, simple contract for the sale of goods!

Sale vs. Agreement to Sell: What's the Difference?

This is a crucial distinction. They sound similar, but in law, they are very different. It all comes down to WHEN the ownership passes.

• A Sale is when the ownership of the goods is transferred from the seller to the buyer immediately at the time of the contract. It's a done deal.
• An Agreement to Sell is when the transfer of ownership is to take place at a future time or subject to some condition being fulfilled.

Here’s a simple way to visualize it:

    Is the property (ownership) transferred IMMEDIATELY?
           |
      +----YES----+
      |           |
    [ SALE ]   [ NO - It will be transferred LATER or on a CONDITION ]
                 |
                 +----------------------------------------------------+
                 |
    [ AGREEMENT TO SELL ]

Kenyan Scenario: You go to a furniture workshop in Ngara. You see a ready-made coffee table you like. You pay for it and arrange for a delivery person to pick it up. That is a SALE. The table is yours right now, even if it's still in the shop.

Now, imagine you ask the fundi (carpenter) to make you a custom dining table just like the one in the catalogue, but using mahogany wood. You agree on a price and pay a deposit. This is an AGREEMENT TO SELL. The ownership of the table will only pass to you in the future, once the fundi has actually built it according to your specifications.

The Golden Rule: Nemo Dat Quod Non Habet

This sounds fancy, but it's a simple and powerful Latin phrase that is the foundation of honesty in trade. It means: "You cannot give what you do not have."

The rule is that a seller who does not own the goods cannot pass ownership (a good title) to a buyer. If you buy a stolen phone, even if you paid for it in good faith, the original owner is still the legal owner. The law protects the original owner.

Image Suggestion: A vibrant, slightly chaotic Kenyan open-air market scene (like Gikomba). In the foreground, a shady-looking seller is trying to sell a very fancy, clearly expensive smartphone to an unsuspecting student. In the background, a person is frantically looking for their lost phone, implying the seller doesn't own it. The style should be a bright, colourful digital illustration.

However, the business world can be complex, so the law provides a few common-sense exceptions to the Nemo Dat rule to protect innocent buyers:

• Estoppel: If the true owner acts in a way that makes it seem like the seller has the authority to sell the goods, the true owner is "estopped" (prevented) from denying it later.
• Sale by a Mercantile Agent: If you buy a car from a registered car dealership in good faith, you get good title, even if the dealer was secretly not authorized to sell that specific car by its owner.
• Sale under a Voidable Title: Let's say Kamau tricks Omondi into selling him his laptop using a fake cheque. Kamau has a "voidable" title. If Kamau quickly sells that laptop to you (an innocent buyer) before Omondi realizes the cheque is fake and voids the contract, you get to keep the laptop. Omondi's only remedy is to sue Kamau.

Risk Passes with Property!

This is another key principle. Generally, the risk of loss or damage to the goods passes with the property (ownership), NOT with physical possession.

Think about this: You go to an electronics shop on Luthuli Avenue and buy a new TV. You pay for it in full via M-Pesa. Ownership has now passed to you. You are the owner. You ask the shopkeeper to hold it for you for one hour while you get a taxi. In that hour, a small fire accidentally starts and damages the TV. Who bears the loss? YOU DO! Even though you hadn't physically taken the TV, you owned it, so the risk was yours. This is why getting insurance for valuable items is so important!

When Things Go Wrong: Remedies for Breach

What happens when one party doesn't keep their end of the bargain? The law provides solutions or "remedies".

1. Seller's Remedies (if the buyer is at fault)

• Action for the Price: The seller can sue the buyer for the full contract price if ownership has passed but the buyer refuses to pay.
• Damages for Non-Acceptance: If the buyer refuses to accept the goods, the seller can sue for damages. The goal is to put the seller in the financial position they would have been in if the contract was completed.

Let's do a quick calculation on this:

Scenario: Amos agrees to buy 100 bags of maize from Beatrice at KES 3,000 per bag.
Contract Price (CP) = 100 bags * KES 3,000/bag = KES 300,000

Amos wrongfully refuses to accept the maize.
Beatrice must now sell the maize on the open market.
The Market Price (MP) on that day has dropped to KES 2,700 per bag.

Formula for Damages = (Contract Price - Market Price)

Calculation:
Total Contract Price = KES 300,000
Total Market Price = 100 bags * KES 2,700/bag = KES 270,000

Beatrice's Damages = KES 300,000 - KES 270,000 = KES 30,000

Beatrice can sue Amos for KES 30,000, which is the loss she incurred.

2. Buyer's Remedies (if the seller is at fault)

• Damages for Non-Delivery: If the seller fails to deliver the goods, the buyer can sue for the loss incurred, which is usually the difference between the contract price and the higher market price the buyer now has to pay.
• Specific Performance: In rare cases, for unique goods (like a famous painting or a specific vintage car), the court can order the seller to deliver the exact goods promised.
• Damages for Breach of Warranty: If the goods are faulty or not as described, the buyer can keep the goods but sue for a reduction in price or for damages.

Lesson Wrap-up!

Phew, we've covered a lot! From the mama mboga to the car dealership, the Sale of Goods Act is working silently in the background of our daily lives. The most important things to remember are:

• The difference between a sale (immediate ownership) and an agreement to sell (future ownership).
• The golden rule: Nemo Dat - you can't sell what you don't own.
• The critical link: Risk passes with property (ownership)!

Understanding these basic principles doesn't just help you pass your exams; it makes you a smarter, more confident consumer and business person. Keep your eyes open, and you'll see these concepts in action everywhere. Well done today!