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What Cannot Be Sold Under The Kenya Sale of Goods Law

Things that cannot be sold
There are various things which cannot be sold in the Kenya sale of goods law.Res extra commerciumare 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 purchasea 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

Making a Sale Agreement Under The Kenya Sale of Goods Law

Under the Kenya Sale of goods law, the 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, andthat 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 aconcursus animorum animo contrahendi.
*.The agreement should be free from mistakeor 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 cannottherefore 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.

What Can Be Sold Under The Kenya Sale Of Goods Law

Generally speaking, anything can be sold, be it corporeal or incorporeal in nature. Physicalexistence 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 morespecialised issues that need to be discussed, in order for the full picture to emerge.The question in respect of a sale ofres suaiswhether or not a person can enter into a validcontract 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, oremptio 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 cancome into being if it involves a thing which is not yet in existence, provided that the thingmay, 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 toconstitute 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 asemptio rei speratae. A classic example would be thatwhere 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:
1.The source of the grain is specified: It mustbe Smith's crop.
2.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 contractemptio spei. For example, Boucher agrees to purchase Smith's next catch of fish for Ksh200. What issold in this case is the hope or expectation ofa catch, not the catch itself. Thespesexists 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 theres vendita, and has sold it without the owner's authority. What is essential is that the seller delivers theproperty 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 theres, 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 theres, 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 litigationin 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 furtherproceedings.Where property is the subject of an actionin rem, it becomesres litigiosa at litis contestatio.

Contract of Sale Under Kenya Sale of Goods Law

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.

Essential Elements of a Contract of Sale Under Kenya Sale of Goods Law

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 thegeneral contractual structure. Of course, like any contract, the requirement of consensus, or agreement, is the most important general element.

Introduction to Kenya Sale of Goods Law

The Kenya sale of goods law is an area of thelegal 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.

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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

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

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.

Kenya sale of goods law: Remedies of the buyer

Like the seller the buyer has rights under Kenya law, which are as follows;

1. The buyer has a right to reject the goods; buyer’s first right or remedy where the seller fails to transfer property or deliver goods; right to reject goods, this goes together with repudiation. Repudiation is only possible when the seller’s breach goes to the root of the contract either because it is a breach of a condition or by its very nature because it renders the contract meaningless. Note that the right to reject is separate from the right to repudiate. When you repudiate you say the contract does not exist but when you reject you are saying yes there was a contract but there is something wrong i.e. the goods are defective etc. if you opt for repudiation you open yourself to all sorts of problems so the prudent buyer would not opt for repudiation but would opt for rejection and then pursue damages. This option is that until a certain reasonable period, there is still time for the seller to deliver conforming goods but when you repudiate you close the door for the seller to make good.

Kenya sale of goods law: Sale under a voidable title

S. 24 of the Sale of goods Act states

“When the seller of goods has a voidable title thereto but his title has not been avoided at the time of the sale, the buyer acquires a good title to the goods, provided he buys them in good faith and without notice of the seller’s defect of title.”

Void, null and void, null and void ab initio

s. 24 talks of a situation where there has been a voidable contract and goods have passed hands at a time before that contract was avoided meaning that a voidable contract can pass a good title so long as the transaction is entered into prior to that contract being avoided. For instance if you enter into a contract through coercion, one can opt out and void the contract. So long as the contract was entered into fraudulently, before the person who has the right to avoid the contract has not avoided the contract, then the contract is still good and the seller the person possessing the title prior to that contract being avoided can pass a good title.

Null and void contract is not avoidable because it does not exist, null and void ab initio

S. 26 (1) Where a person having sold goods continues or is in possession of the goods, or of the documents of title to the goods, the delivery or transfer by that person, or by a mercantile .

Transfer applies only to title

This section talks of delivery of transfer – weird, as these two don’t go together. You don’t transfer documents of title you deliver. In Nemo dat we are trying to see how the courts have gone about ameliorating justice for the owner of the goods who has bought goods in good faith and without faith from a non-owner. This section is talking about seller in possession. He is still in a position to sell those goods to a third party so who should get a better title? There is the issue of balancing the equities.

If you go to the shops in market street for example and want to buy a suitcase, you buy it and tell the seller that you have gone to bring the vehicle but when you get back you find that the suitcase has been sold to somebody else, but the seller resells the same goods to another person, the second buyer will be a bona fide purchaser for value since he has bought the suit case without notice for value.

City Far Co. Ltd. V. Fureenbord (1937) AER 799

STAFFS MOTOR GUARANTEE LTD V. BRITISH WAGON CO. LTD [1934] 2 KB 305

goods are stolen by T and T sells the goods to B. Since T has no title to the goods he cannot pass a good title to B1. Then the owner of the goods finds the goods with B1 who is claiming he bought the goods from T for value without notice. T would ordinarily get prosecuted. When the owner of the Goods discovers this, he does not go negotiating with T but goes directly to S and tells the owner to name his price so that he can pay for them to avoid a scandal. S names a price and T pays the price and buys the goods from S to cover up his own exposure as a thief. Does a seller who at the time of sale had no title but subsequently acquires a good title; does the acquiring of a good title go to cover the deficiencies of the first mistake?

1. T as a non-owner of the goods without authority cannot sell and pass a good title to B 1. (Nemo dat basic rule).

2. His subsequent acquisition of a good title from O has two facets, at the time when T and B entered into an agreement there was no title in T which he could pass, the original contract cannot be cured by the subsequent acquisition of title by T.

3. The action by the seller to agree to have the goods bought by T original thief

s. 26 (1) deals with seller in possession and the seller has already sold the goods and possession has passed. The seller can pass a good title to the 2^nd buyer.

Where the buyer has acquired possession and does not have a good title and sells the goods to buyer 2, there is a contract of sale between the seller and Buyer 1 who has sold the goods but retains property. The goods are with buyer but title with the seller. Buyer 1 sells the goods to B 2 while the title is still with the seller.

Section 26(2)

The effect is that where the buyer has bought or agreed to buy and he/she acquires possession of those goods with the consent of the owner, any sale or pledge by the buyer even though title is still with seller so long as B2 buys in good faith and without notice, B2 has a good title.

Kenya sale of goods law: Sale of goods by a non-owner

Under Section 23(1) of the Kenya sale of goods Act, only the owner of the goods can sell and pass a good title and no non-owner can pass a good title unless the owner of the goods is estopped or excluded from denying that the seller had his authority or circumstances to sell.

The Rule of Estoppel or Exclusion is a rule of evidence and not a rule of law. A person can be precluded from giving evidence if by his conduct he has led other persons to believe that the goods weren’t his.

A non-owner cannot pass any good title to another person except where the owner is estopped from denying the authority of the seller. Where a seller sees his goods being sold and he keeps quiet, he is estopped from giving evidence that the goods were his. His conduct of omission precludes him from claiming the goods.

What is the effect where the owner has been estopped the person who has the goods keeps the goods. The effect of estoppel is to invest title to the 3^rd party who is an innocent buyer.

Eastern Distributors Ltd V. Goldring (1967) 2 QB

In pursuance of a plan to deceive a finance company, one M signed and delivered forms to C which enabled C to represent that he had M’s authority to sell a car belonging to him, it was held by the court of Appeal that M was estopped from setting up his title against the plaintiffs who had bought the car from C. It was also held that the estoppel in fact operated to pass a good title to the plaintiffs not only against M himself, but also against a buyer in good faith from M.

The effect of estoppel in sale of goods is to pass title.

Only an owner of goods can sell and pass a good title. When can a non-owner sell and pass good title? Under what circumstances?

Where the owner is estopped by his conduct from denying the auctioneers’ authority to sell.

Sale by an agent S. 23(1) agent is authorised or sells the goods with consent of the owner. The agent never becomes the owner he is only selling the goods and passing the property because he is authorised by the owner. A sale by an Agent passes a good title.

Section 23 (2) (b) the validity of any contract of sale under any special common law or statutory power of sale or under the order of a court of competent jurisdiction. Section 23 (2) a and b deal with special powers of sale where a non-owner may pass a good title if the or the sale is under the order of a court of competent jurisdiction…

The courts may authorise a Sale of Goods where a decree holder has sought to sell the goods because the party is unable to clear the money owed. The decree holder applies to the court to attach the goods; neither the court nor the auctioneer is the owner of the goods but they can sell the goods.

Order of Court – A court can order a sale. The court may order a Sale of Goods even though there is no decree holder. Where goods that are perishable have been deposited with the courts or where the prices of the goods are falling, the court can order that the goods be sold while waiting for determination of the case.

Sale in Market Overt: - A market overt is an open public and legally constituted market. Sale of Goods Cap 31 Laws of Kenya does not have any provisions for a market overt. This is found in the English Sale of Goods Act. What we have are public markets. The key distinction between market overt and other markets is that a person who purchases goods in a market overt passes good title irrespective of whether the seller had authority.

The goods in the market overt are determined by the market overt. Goods sold in market overt are specific goods i.e. if you go to Wakulima Market you can buy vegetables but you do not expect to buy, lets say a car! In the market overt situation, all our markets qualify to be market overt but we call them public markets and anything that you buy in those markets that is generally sold there you get good title so long as it is specific to that market.

Kenya sale of goods law: Remedies of a seller

Where the buyer under Kenya law defaults in his principle obligation then the seller can claim her/his damages. When parties go to court it can take a long time to sort out court litigation and there are cases that have been pending for the last 6 years. It is therefore important for the seller to consider the best option in enforcing his remedies. There are two remedies for the seller

1. Real Remedy

2. Personal Remedy

Real remedy under Kenya law is that right which the seller has by virtue of being in possession of the goods. He holds the goods as security until the price is paid. Real remedy is only available where the seller has possession where property has passed and he has not delivered the goods to the buyer or he has repossessed the goods. This real remedy is based purely on possession of goods by the seller and as soon as the seller has released possession, the remedy passes. One must be in possession of the goods.

The second remedy has to do with where the seller must be an unpaid seller. The seller is unpaid where he or she has not received the total price. A seller is unpaid if he/she has not received total price or the total price has not been tendered to him/her no matter how small the balance is. The seller is also unpaid when the bill of exchange or negotiable instrument has been dishonoured. Note that the seller includes the seller’s agent.

There is another remedy – the lien.

Lien under Kenya law is the right to retain goods until the whole of price has been either paid or tendered. Note that the seller’s lien does not give the seller any property in the goods but the lien allows the unpaid seller the right to resell the goods subject to certain conditions

1. Seller must be unpaid seller

2. No right to lien if goods are sold on credit and the time for the credit has not expired;

3. The unpaid seller must be in possession of the goods; if for any reason the unpaid seller loses possession of the goods then both real remedy and lien remedy are lost. The two remedies are based on the seller being in possession.

Anytime between delivery of goods to an agent/carrier for onward transmission to the buyer, the unpaid seller has a right to stop the sale of goods, Stoppage in transit. Stoppage in transit applies when the buyer becomes insolvent in which case the seller may resume possession of the goods and he may retain the same until he/she is paid the same price.

Conditions for stoppage in transit under Kenya law

1. The seller must be unpaid,

2. Buyer must be insolvent

3. The goods must be in transit

Vendor v. Carrier

There is a carrier who is obviously an agent of the seller, if for instance the sale of goods contract says that the seller shall deliver the goods to the buyer and the seller loads the goods to vehicle to deliver to the buyer then the goods are still in the seller’s possession. Where the carrier is the agent of the buyer, then immediately the goods are delivered to that carrier, the seller has delivered the goods to the buyer and the stoppage in transit is only applicable where the goods have not reached the buyer. If you can determine that the carrier is the buyer’s agent, the goods have been delivered to the buyer as soon as they are loaded.

Where you have an independent contractor it is your duty to determine whose agent the independent contractor at the time you want to ascertain possession of the goods. Even with the independent contractor, the person who gives the initial instructions is by and large the principal, master and employer.

When you talk of vendor and carrier therefore if the seller gives orders to the carrier and that carrier happens to be the seller’s agent to stop delivery to the buyer and the carrier disobeys the instructions, if the carrier delivers the goods to the buyer he commits conversion. Where the carrier is a common carrier e.g. Malindi bus where you have loaded omena and the bus has left carrying the fish. Somewhere along Mtito you get information that the buyer has been declared bankrupt, who has possession of these goods?

Once the seller has possession either initially or through stoppage in transit, he has a right to resell or hold on the goods and force the buyer to pay, if the buyer cannot afford to pay, the seller can sell the goods if he still has possession and pass a good title to the second buyer. But supposing the unpaid seller after resale makes a profit? Who is entitled to the profit? The profit goes to the unpaid seller not the buyer. It is inequitable that an unpaid seller who is selling the goods because the buyer has defaulted that the seller is entitled to get whatever is over and above. The buyer who has acquired property in the goods without payment and now would want to make a profit of the goods that he has inconvenienced the seller by not paying should not benefit from the subsequent sale of the goods. Even when the seller sells the goods to reclaim his money, he can still sue the buyer for damages.

Kenya sale of goods law: Transfer of property in goods

In this context, property means and includes title, ownership.

Transfer of Property involves some action by the parties themselves. If there is a contract to be signed for ownership to pass from seller to buyer, then you sign and transfer.

In passing of property, the parties need not do anything. Basically this is ownership moving from seller to buyer by operation of the law. It is inactive

there is no direct participation of the parties.

Property in the goods under Kenya law means ownership in these goods.

The practical consequences of transferring property.

i) If property has passed to the buyer the buyer has a title to them and even when the seller becomes insolvent after the transfer, the fact that the seller is still in possession does not entitle the receiver in bankruptcy to touch the goods. Where there are 2 legislation in conflict, ordinary legislation could mean that they have seen some loopholes that need to be addressed so the latter takes precedent.

ii) If goods are delivered subject to a reservation of a title or property (ownership) by the seller, then the buyer may have good title to the goods should the seller become insolvent.

iii) The right to sue a third party for loss or damage to the goods rests in the person who has the property. The owner is the one who can sue.

iv) The risk whether of damage or loss prima facie passes when property passes. He who has property bears the risk.

v) Once property has passed the seller can only sue for price. The seller cannot file a suit seeking to rescind the contract.

Kenya sale of goods law: Types of goods

There are two key types of goods under Kenya law

1. Specific

2. Unascertained goods.

The crux of Sale of Goods Contract is the passing of the property in the goods from seller to buyer. This can only happen where the goods are unascertained, property cannot pass.

18. Where there is a contract for the sale of unascertained goods, no property in the goods is transferred to the buyer unless and until the goods are ascertained.”

Specific goods under Kenya law are goods which have been identified, agreed upon and set aside by the parties for the contract and the goods can be specific either at the time the contract is entered into or they can be made specific in the course of dealing. For instance when talking of a motor vehicle, you will be talking about the engine number and the chassis number being what you specified so only that vehicle is the specific goods subject of the contract. Only the property in specific goods will pass. No other goods will do.

19. (1) Where there is a contract for the sale of specific or ascertained goods, the property in them is transferred to the buyer at such time as the parties to the contract intend it to be transferred.

(2) For the purpose of ascertaining the intention of the parties, regard shall be had to the terms of the contract, the conduct of the parties and the circumstances of the case.

An identified part of a specific whole.

Kursell V. Timber Operators & Contractors Ltd.

The Plaintiff sold to the defendant all the trees in a Latvian forest which conformed to certain measurements namely 15 meters on the date of the contract. The Buyer would have 15 years on which to cut and remove the timber. Almost immediately afterwards, the Latvian Parliament passed a law confiscating the forest. The matter went to court and went to the House of Lords primarily on one issue. Had the property in the trees passed from the Seller to the Buyer or as one of the Judges did “whose forest and therefore the trees was confiscated by Parliament? Remember he who has the property bears the risk. The court held as follows

“the property in the goods had not passed to the defendant the buyer as the goods were not sufficiently identified since not all the trees were to pass to the buyer but only those conforming to the stipulated measurements namely 15 metres.”

Kenya sale of goods law: The subject matter in a contract of sale

Copyrights, patents, trade marks are not personal chattels and are thus not goods that can be sold.

Different Types of Goods under Kenya law

2. (1) 3 types of goods

1. Existing Goods;

2. Future Goods; &

3. A spes.

Existing Goods

Existing Goods may be either owned by or in possession of the seller. Existing Goods may also be specific or unascertained. The distinction between specific goods and unascertained goods is crucial. The key thing being that in a sale of goods contract, the purpose is to transfer or pass the property in the goods from the seller to the buyer and property will not pass to the buyer from the seller subject to …

Specific goods are goods, which have been identified and set aside for the purposes of contract of sale. That particular contract, property passes instantly in a sale of specific goods.

Section 18. Property in unascertained goods.

18. Where there is a contract for the sale of unascertained goods, no property in the goods is transferred to the buyer unless and until the goods are ascertained.”

Section 19 property in specific goods or ascertained goods passes when intended to pass.

(2) For the purpose of ascertaining the intention of the parties, regard shall be had to the terms of the contract, the conduct of the parties and the circumstances of the case.

2. FUTURE GOODS:

Future goods under Kenya law include goods not yet in existence e.g. crops to be grown, industrial products to be processed or manufactured. Future goods also include goods that physically exist but they are not yet acquired by the seller. Future goods cannot be specific goods within the Act within Cap 31 but note that under certain circumstances future goods may be so sufficiently identified that courts have sometimes said that future goods can be specifically identified.

Future goods meaning that the goods do exist but the seller does not yet have property in those goods and so he cannot transfer them.

Howell V. Coupland (1876) 1 Q.B.D. 258

The case was decided on the basis of future goods. It was held that a sale of two hundred tonnes of potatoes to be grown on a particular piece of land was a specific sale of goods. Although the potatoes were not grown the contract was held to have existed. The piece of land that was supposed to grow the potatoes disappeared under water but it had been so well defined that a contract was held to have existed. The contract was frustrated. The doctrine of frustration cannot apply in any case where the goods are not specific. Specific goods are those that have been set aside and agreed upon by the parties. The potatoes were not even grown yet the court used the doctrine of frustration. The goods in this case were future goods and you cannot have frustration in goods that did not exist in the first place.

Could this case have been decided on the basis of A spes?

A spes

This is under Kenya law a sale of a chance, which is different from future goods mainly through the construction of the terms used by the courts. It arises where a potential buyer agrees to buy future goods from a particular source and agrees to take the risk of the goods never coming into existence e.g. I agree to buy whatever crop is produced from plot ‘A’ of your land in Kitale Town at a thousand shillings per bag. The buyer has offered to buy whatever crop is grown on that land and is taking a chance because the crop might never get grown. It looks like a gamble and in a gamble one party stands to lose and one party stands to gain. The buyer takes the risk and undertakes to pay the price of the non-existent goods. The seller undertakes to produce and deliver the crop come rain come shine. So there is no winner and no loser. If the goods do not get produced on that piece of land, the seller is bound to deliver and he might have to go out and buy the goods elsewhere because he must deliver. The buyer by undertaking to pay 1000 still has to pay 1000 even if the crop price was to drop to 200 per bag because he has undertaken to do the same.

It is a risk by both parties, the seller undertaking the risk that the goods might never be produced and the buyer taking the risk that the price might depreciate in the meantime.

There are 3 categories of goods under Kenya law

Existing goods – goods that actually exist when the contract is entered into, future goods - goods yet to be produced or grown and don’t necessarily exist and are not in the possession of the seller and A spes- here each party chances or gambles