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Difficulty: Very hardSale of Goods Act: Transfer of Title, Delivery, and Buyer/Seller Remedies

Alhaji Audu agrees to construct and deliver 500 customized school desks to Bright Academy. The written contract explicitly stipulates that ownership and title to the desks shall remain with Alhaji Audu until the full purchase price is paid upon final physical delivery. Before delivery occurs or any payment is made, Bright Academy repudiates the agreement and refuses to accept the completed desks. Alhaji Audu immediately files a lawsuit against Bright Academy claiming the full contract price of the desks. Under the Sale of Goods Act, how will the court evaluate Alhaji Audu's claim, and what is his legal remedy?

  1. The action for the contract price will fail because property in the goods has not passed to the buyer; the seller's proper remedy is an action for damages for non-acceptance.Answer
  2. B
    The action for the contract price will succeed because the breach represents a violation of an essential condition, automatically transferring title and risk to the buyer.
  3. C
    The seller is entitled to recover the full contract price because title passed to the buyer upon contract signature under conditional deferred payment rules.
  4. D
    The claim for the contract price will fail because customized manufacturing contracts are treated as mere invitations to treat rather than enforceable commercial sales.

Answer

The action for the contract price will fail because property in the goods has not passed to the buyer; the seller's proper remedy is an action for damages for non-acceptance.
Under the Sale of Goods Act, a seller can only sue for the contract price if title (property) in the goods has passed to the buyer, or if payment was due on a specific fixed date regardless of delivery. Because the seller explicitly retained ownership until payment upon delivery, property remained with the seller. Therefore, when the buyer repudiated the contract prior to delivery, the seller's legal remedy is an action for damages for non-acceptance under Section 50, rather than an action for the contract price.

Step-by-Step Solution

1
Analyze whether property (title) in the desks passed to the buyer.
Property did not pass because the express terms retained title in the seller until full payment upon delivery.
Under the Sale of Goods Act, property passes when the parties intend it to pass. Here, intention was expressly stated.
2
Determine the statutory conditions for an unpaid seller's 'Action for Price' under Section 49.
An action for the price requires that property has passed to the buyer, or that payment was payable on a day certain irrespective of delivery.
Neither condition was satisfied as property remained with the seller and payment was tied to delivery.
3
Identify the correct statutory remedy for wrongful non-acceptance under Section 50.
The seller is entitled to bring an action against the buyer for damages for non-acceptance.
When the buyer wrongfully neglects or refuses to accept and pay for goods, and property has not passed, the seller's remedy is unliquidated damages measured by the loss directly resulting from the breach.

Key Concept

Unpaid Seller's Remedies: Action for Price vs Damages for Non-Acceptance
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Topics

Sale of Goods Act: Transfer of Title, Delivery, and Buyer/Seller Remedies

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