KENYA LAWS ONLINE: Kenya Sale of goods Law

This section gives you details on sale of goods law under the Kenya Sale of Goods Act CAP.31 of the laws of Kenya.Below are some topics and a comprehensive introduction to the Kenya sale of goods law-

Payment and delivery concurrent conditions.
Rules as to delivery.
Delivery of wrong quantity or description.
Delivery by instalments.
Delivery to carrier as buyer’s agent.
Risk where goods delivered elsewhere than at place of sale.
Acceptance.
Duties of seller and buyer.
Buyer is not bound to return rejected goods.
Liability of buyer for neglecting or refusing delivery of goods.

Introduction to Kenya sale of goods law

The Kenya sale of goods law is an area of the legal system which describes the rules applicable to a contract of sale (or, to be more specific, purchase and sale, or emptio venditio), generally described as a contract whereby one person agrees to deliver to another the free possession of a thing in return for a price in money.The rules for the sale of goods are spelt out in the Kenya sale of goods Act.

Definition

The contract of sale, as it is known in Kenya today, derives its origins from the Roman consensual contract of emptio venditio. In D 18.1 (the title devoted to the contract of emptio venditio), there is no all-embracing definition of the special contract, but certain critical features can be extracted from the early fragments of the title:

Sale is a contract of the law of nations, and so is concluded by simple agreement. There is no sale without a price. There can be no sale without a thing to be sold.

The Roman-Dutch lawyers followed these guidelines closely in their definitions of the contract of sale. For example, Voet said:

Purchase defined—But in this title, as distinguished from lease, it is a bonae fidei contract, resting on consent, by which it is arranged that merchandise shall be exchanged at a definite price. There are three essential requirements for it—consent, merchandise and price. If one of them is wanting, there is no purchase.

Essentials

In general terms, the essential elements of a contract of sale are no different to the essential elements of any other contract. There must be contractual capacity and consensus, the agreement must be legal (not contrary to public policy), performance must be possible, and any formalities required by law must be complied with. The contract of sale does, however, have a number of additional substantive requirements (known as essentialia), which are assimilated into the general contractual structure. Of course, like any contract, the requirement of consensus, or agreement, is the most important general element.

Agreement

Under the Kenya Sale of goods law, he parties must be in agreement that the object of the contract is to purchase and to sell the res concerned, for the price agreed upon, and that the seller will (usually) ensure the transfer of possession and/or ownership of the res to the buyer.

The general principles relating to consensus in purchase and sale are the same as those pertaining to other multilateral consensual contracts. The relevant points may be summarised as follows:

There must be an agreement of the minds of the parties, mutually communicated, usually by means of offer and acceptance.
The parties must act with the intention of contracting a sale. there must be a concursus animorum animo contrahendi.
The agreement should be free from mistake or error, and should not have been induced wrongfully by misrepresentation, duress or undue influence.
The agreement should be legal and satisfy the dictates of public policy.
The agreement should be rational. It cannot therefore exist in cases of extreme youth, irrational intoxication or insanity.

In sales in particular, there must be agreement as to:

the subject matter of the sale and its essential characteristics;
the price to be paid; and
any other item raised in the negotiations and expressly or impliedly regarded as material.

The two essentialia of a contract of sale are therefore

the thing sold; and
the price to be paid.

Thing sold

The parties to the sale under the Kenya sale of goods law must reach agreement over the subject matter of the sale. The general requirement is that the subject matter of the sale should be

defined and ascertainable (although the merx need not be entirely specific); and
existing at the time of the contract, or having a potential existence.

It is best to tackle the intricacies of this particular section by first examining things that can be sold, and secondly, things that cannot validly be sold.

Things that can be sold

Generally speaking, anything can be sold, be it corporeal or incorporeal in nature. Physical existence is not required in order for there to be a valid sale. Anything that can be held, possessed or sued for can be the subject of a valid sale. There are, however, certain more specialised issues that need to be discussed, in order for the full picture to emerge.
The question in respect of a sale of res sua is whether or not a person can enter into a valid contract of sale, involving the purchase of a thing which is (unbeknownst to him) his own property already. The general rule is that things owned by the buyer cannot be the subject of a valid sale. It is possible, however, for the purchaser to buy rights in his own property which he does not yet hold.
Unascertained goods may form the subject matter of a valid contract of sale. Such sales may be termed generic sales, or emptio generis. Future goods, or goods which do not yet exist, may also be the subject of a valid sale. Such a sale may take one of two forms.
A sale under the Kenya sale of goods law can come into being if it involves a thing which is not yet in existence, provided that the thing may, in the ordinary course of events, come into existence. Pothier says the following:
There cannot, in truth, be a contract of sale without a thing sold, but it is sufficient that the thing sold may exist, though it has no present existence. Thus, it is common before harvest, to sell the wine which we may make; and in such case, there is a sufficient thing to constitute the object of a valid contract, though as the thing sold does not yet exist, the contract depends upon the condition of its future existence; and if it should not yet happen to exist, that is, if no wine should be made, there will be no sale.
These sort of contracts are known as emptio rei speratae. A classic example would be that where Boucher agrees to purchase Smith's next crop of maize at Ksh40 per bag. Because the sale involves maize, it appears at first glance to be a generic sale, but it is distinguishable on at least two grounds:

The source of the grain is specified: It must be Smith's crop.
The agreement is subject to a suspensive condition: If Smith's crop does not materialise, there is no sale.

It is possible to purchase the expectation or hope that something might come into existence, irrespective of whether it does or does not come into existence in future. The jurisprudent Pomponius is quoted as saying:
Sometimes, indeed, there is held to be a sale, even without a thing, as where what is bought is, as it were, a chance. This is the case with the purchase of a catch of birds or fish. The contract is valid even if nothing results, because it is the purchase of a hope.
Such a contract is a contract emptio spei. For example, Boucher agrees to purchase Smith's next catch of fish for Ksh200. What is sold in this case is the hope or expectation of a catch, not the catch itself. The spes exists at the date of sale. It makes no difference to the obligations of the parties whether Smith catches anything at all. Thus, Boucher runs the risk of making a loss, in that he must pay even if nothing comes into existence, but may benefit in that he may receive greater value than his capital outlay.
Res aliena, things which are not the property of the seller, may also be the subject of a valid sale. It is not essential that the seller be the owner of the goods at the time of delivery. The sale is not void simply because the seller is not the owner of the res vendita, and has sold it without the owner's authority. What is essential is that the seller delivers the property to the buyer, and ensures that his possession is not thereafter interfered with by anyone with better title. The buyer in such circumstances is protected (at the very least) by the residual warranty against eviction.
Delivery of the res, in such circumstances, would result in transfer from the seller to the buyer of whatever rights the seller had. The buyer would acquire civil possession of the res, the consequences of which would be, inter alia,

the right to ownership upon completion of prescription;
the right to the fruits of the property; and
the right to utilise possessory remedies.

Things which are the subject of litigation in rem (res litigiosa) may be the subject of a valid contract of sale as well. Such a sale might occur where property, which is the subject of pending court action, is sold in the interim. Should such property be sold, the purchaser will be bound by the judgment in the action. The successful plaintiff will be entitled to recover it from the purchaser (the new possessor) by execution, without further proceedings.
Where property is the subject of an action in rem, it becomes res litigiosa at litis contestatio.

Things that cannot be sold

There are various things which cannot be sold in the Kenya sale of goods law. Res extra commercium are among them. Numerous rules of statutory and common law prohibit the sale of certain things, often on grounds of public policy. For example, the common law does not sanction the sale of a person (slavery), and statute prohibits the sale of human tissue, and of many narcotics, chemical substances and so forth.
It is also quite clearly impossible to purchase a thing that never existed. The most extreme example would be the putative sale of a mythical or fictitious object. Justinian says:

Anything, whether moveable or immoveable, which admits of private ownership, may be made the object of a stipulation; but if a man stipulates for the delivery of a thing which either does not or cannot exist, such as [...] an impossible creature, like a hippocentaur, the contract will be void

Legal effects of the contract

Passing of ownership

Under the Kenya sale of goods law,it is not a requirement of a valid contract of sale that ownership should pass from seller to buyer. Although parties to a sale usually contemplate this happening, it is not an essential feature of a contract of sale, and (as we have seen) sales by non-owners are permissible. At common law, the transfer of a real right of ownership (the performance of the contract) is regarded as a separate legal transaction from the contract itself, which creates only personal obligations.
Because ownership does pass as a result of most contracts of sale, however, the issue of ownership is an important incidence of a sale.
Usually, to transfer ownership in a res, it is not only necessary that it be physically delivered by the owner; it is necessary also that the owner have the intention of transferring the right of ownership to the buyer, and that the buyer have the intention of becoming the owner of the thing in question.
As far as sales are concerned, there are certain additional refinements:

Immoveable property
In the case of immovables, ownership under the Kenya sale of goods law passes upon registration of transfer. Registration constitutes delivery in the case of immovables, and ownership passes whether the price has been paid or not.

Incorporeals
Ownership in incorporeals is transferred by means of cession.

Moveable property
Ownership in moveable property is transferred

upon delivery of the res; coupled with
either payment of the purchase price, the provision of security or the giving of credit.

Delivery

Delivery under the Kenya sale of goods law will usually occur by means of traditio. Ownership will pass on traditio only if the following essentials are present:

The thing must be capable of ownership.
The seller must have legal capacity to sell.
Traditio must be made by the seller (or his agent), since the owner of the thing cannot be deprived of his ownership by the wrongful act of another, and no-one can transfer greater rights in a thing than he possesses. No-one can make someone else the owner of a thing of which he is not the owner.
The seller must intend to pass ownership to the buyer.
Delivery must be made to the buyer (or his agent).
The buyer must have legal capacity to become owner of the thing.
The buyer must accept delivery, intending to acquire ownership in the thing.

Forms of delivery

Delivery may occur in two ways.

Actual delivery

Actual delivery (traditio vera) occurs where the res vendita is physically handed over by one person to another de manu in manum.

Constructive delivery

Constructive delivery concerns those various methods of transferring ownership by which no physical handing over of the res vendita takes place. There are five methods of constructive delivery:

traditio longa manu;
traditio brevi manu;
constitutum possessorium;
symbolic delivery; and
attornment.

Payment

It is important to distinguish between how ownership passes in cash and credit sales respectively. In a cash sale, ownership passes once there has been (in addition to delivery) due payment of the purchase price. In a sale on credit, the fact that credit has been given is an indication that ownership merely passed on delivery. In an ordinary credit sale, the seller cannot claim that he did not intend ownership to pass until the full price had been paid. (This does not cover the situation where the sale is one subject to a pactum reservati dominii).
In the absence of agreement (express or implied) that credit has been granted, it is presumed that every sale is a cash sale. The presumption of a cash sale may therefore be rebutted by adducing evidence of an agreement to give credit. If the rebuttal succeeds, ownership will pass on delivery. If credit has not been granted, ownership will not pass until the price has been paid, even if delivery has in the meantime taken place. An agreement to give credit must be clear and specific.
That being said, it is now much more difficult to show an agreement on credit than under the common law.
Where a sale is for cash, and the seller accepts a cheque for payment of the cash price, ownership will not pass (notwithstanding the delivery of the res vendita) unless the cheque is met when presented for payment.