BUSN7052 Chap.10 Sale of Goods: Implied Terms, Property and Risk
Sale of Goods: Implied Terms, Property and Risk
The Sale of Goods Act 1954 (ACT) governs every sale of goods for a price, whether the buyer is a household or a business. This chapter defines a contract of sale and the goods it covers, separating goods from services, software downloads and choses in action.
It then explains the implied conditions and warranties in ss 17 to 20, the section 23 rules that decide when property passes, the default rule that risk follows property, the nemo dat rule and its exceptions, and the remedies of an unpaid seller and of a buyer.
What this chapter covers
- 01
Contract of sale under s 6(1) and the meaning of goods
- 02
Implied terms on title, description, quality, fitness and sample
- 03
Section 23 rules for passing of property
- 04
Risk follows property and its exceptions
- 05
Nemo dat and the protection of innocent buyers
- 06
Remedies of unpaid sellers and buyers
Worked example · free
A second-hand coffee machine that turns out to be stolen
- +1This is a sale of goods for a price under s 6(1).
- +2Section 17 implies a condition that the seller had the right to sell; a seller of stolen goods had none, so the condition is breached (Rowland v Divall).
- +1Breach of the title condition lets the café recover the $4,500 price it paid (s 57).
Key terms
- Contract of sale
- A contract under which ownership of goods passes, or is promised, in exchange for money.
- Specific goods
- Goods identified and agreed on when the contract is made.
- Unascertained goods
- Goods described by type but not yet identified, such as part of a bulk.
- Nemo dat rule
- The principle that a seller cannot pass better title than it has.
- Reservation of title
- A term keeping ownership with the seller until payment, registrable as a security interest.
- Unpaid seller's lien
- A seller's right to keep goods in its possession until they are paid for.
Sale of Goods: Implied Terms, Property and Risk FAQ
Does the Sale of Goods Act apply to software?
It depends on the form. Software on a physical disc is goods, but a paid download was held not to be goods in Gammasonics, so the Act did not apply. The Australian Consumer Law is broader, because its definition of goods expressly includes computer software, as Valve Corporation v ACCC confirms.
When does ownership pass if I pay now and collect later?
For an unconditional contract for specific goods in a deliverable state, Rule 1 in s 23 passes property when the contract is made, even though payment or delivery is postponed. Because risk follows property, accidental loss before collection then generally falls on the buyer unless the parties agreed otherwise.
What if the goods were unfit because of something I never told the seller?
The fitness condition in s 19 depends on the buyer making the particular purpose known and relying on the seller's skill or judgment. In Griffiths v Peter Conway the buyer had abnormally sensitive skin and did not disclose it, so the seller was not in breach of the fitness condition.
Can a seller's terms exclude the implied conditions?
Not in the ACT. The slides state that the Sale of Goods Act terms cannot be excluded there even by agreement, although parties can exclude them in other jurisdictions. Consumers have the additional protection that the ACL guarantees cannot be excluded under s 64.
Exam move
Work the Act as a sequence of gates. First, is this a contract of sale of goods for a price? Practise on the tutorial-style list of borderline items: a banknote, an antique coin, a mural, a pawn, a meal with accommodation, a software download. Second, which implied term is engaged?
Learn ss 17 to 20 with one case each and the limit on each: examination for merchantable quality, disclosed purpose and the trade name exception for fitness. Third, if loss or damage occurred before delivery, who held property and therefore risk?
Recite the five s 23 rules with their examples and practise on scenarios with and without an express term about ownership, because an express term displaces the rules entirely, as one past guide noted. Fourth, who has title when a non-owner sells? Keep the nemo dat exceptions on a card with their sections.
Finally, attach the remedy: rejection for breach of condition, the price recovered, damages measured as the slides describe, or the unpaid seller's rights against goods and buyer. Answers that move through these gates in order rarely miss an issue, and they connect naturally to the consumer law guarantees in Chapter 11 when the buyer is also a consumer.
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