Business Law – BUL 311

COMMERCIAL LAW STUDY QUESTIONS

Question 1

It is generally believed that the duty to deliver the goods is perhaps, the most important and
the most extensive duty owe the buyer by the seller. Are you persuaded?

Answer

Basically, there are two duties of the seller to the buyer. These are the duty to pass a
good title as stipulated in section 12(1) SGA and the duty on the seller to deliver the goods as
provided for under section 27 SGA

However, between these two duties, the duty to deliver the goods is perhaps, the most
important and the most extensive duty owe the buyer by the seller as it encompasses method
of delivery, place of delivery, time of delivery, etc.

Duty to pass a good title

By virtue of section 12(1) SGA where the circumstances of contract do not show a
different intention, the buyer must of necessity be endowed with some implied terms. First
and foremost is an implied condition that the seller has a right to sell. Second is that there is
an implied warranty that the goods sold to the buyer would guarantee freedom to enjoy quiet
possession, and third is the implied warranty that the goods sold to the buyer must be devoid
of any charge or encumbrance in favour of any third party, not declared or known to the buyer
before or at the time when the contract is made”.

A case illustrating the effect of the provisions of this section is Akoshile v. Ogidan. In
that case, the defendant who had earlier bought a car from a European for 335 pounds sold it
to the plaintiff, a second buyer, for 340 pounds. Subsequently, the European was convicted of
stealing the car and the car was therefore removed from the plaintiff‟s possession by the
police. The plaintiff then brought an action for the recovery of the 340 pounds purchase price
from the defendant. The defendant relied on the doctrine of caveat emptor-(Buyer’s risk: or
buyer beware). This contention was rejected and the court held that the plaintiff was entitled
to a refund of the purchased price he paid for a car, when it was discovered that the defendant
had no title to it.

The duty on the seller to deliver the goods

As a general rule, the seller has the duty to deliver the goods to the buyer.

What then is delivery?

Section 62 SGA defines delivery as a voluntary transfer of possession from one person to
another. It may be important to mention that the rules governing delivery are essentially a matter of
agreement between the parties; and the rules contained in the Act only apply in so far as no contrary
agreement has been made.

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This duty on the seller to deliver the goods to the buyer is wide and expansive. Under Section
27 SGA, it is the duty of the seller to deliver the goods, and of the buyer to accept and pay for them,
in accordance with the terms of the contract of sale.

Payment and delivery are concurrent conditions

Under Section 28 SGA, it is established that unless otherwise agreed, delivery of the goods and
payment of the price are concurrent conditions. This means that the seller must be ready and willing
to give possession to the buyer in exchange for the price, and the buyer must be ready and willing to
pay the price in exchange for possession of the goods. By implication, if the seller said for instance,
he would not deliver the goods after the sale, the buyer may refuse to pay, (indeed the buyer ought to
refuse to pay). The buyer would then sue the seller in an action for damages for non-delivery. The
seller would then not be able to sue for non-payment. On the other hand, if the buyer said that he
would not pay the price after the sale by the seller, who was willing and ready to deliver the goods,
then the seller could refuse to deliver and could thereafter sue for the price. One interesting
interpretation of this provision is that a buyer cannot insist on delivery unless he has the ability to pay
for the goods.

This rule found judicial application in the case of J.B. Bekederemo v. Colgate Palmolive (Nig)
Ltd (1976) 6 S.C. 15. In that case, the contract contained the term that “all the purchases of the
company‟s (seller‟s) goods by the distributor (buyer) shall strictly be for cash payments. Provided
that the company (seller) will grant up to thirty days credit after delivery of the goods by the
company to the distributor within which the distributor shall effect payment in full for all the goods
delivered.” The respondents supplied to the appellant on nine specific occasions in 1972 for which
the latter made part payments against each occasion leaving substantial balance. Despite this balance,
the appellant insisted that he was entitled t further supplies of goods and that the respondent‟s failure
to do so was a breach of the agreement. In a decision affirmed by the Supreme Court, it was held that
the obligation of the respondents to deliver goods to the appellant and the latter‟s undertaking to pay
cash immediately or within thirty days was concurrent and correlative promises and that the appellant
could not insist on delivery of the goods when he showed no ability to pay for them.

Place of delivery

Section 29(1) SGA provides: “Whether it is for the buyer to take possession of the goods or for
the seller to send them to the buyer is a question depending in each case on the contract, express or
implied, between the parties. Apart from any such contract, express or implied, the place of delivery
is the seller‟s place of business, if he has one, and if not, his residence: Provided that if the contract
be for the sale of specific goods, which to the knowledge of the parties when the contract is made are
in some other place, then that place is the place of delivery.”

By the proviso in this section, if the contract is for the sale of specific goods which to the
knowledge of both parties at the time of the contract are in some other place, then the place is the
place of delivery. Thus, if „A‟ sold goods, a combine harvester lying at Ugbogui farm to „B‟ which
both parties knew to be in that farm, that Ugbogui farm will be the place of delivery of the farming
equipment. Thus, in Associated Press of Nigeria Ltd v. Philip (W.A.) Records Ltd (1973) 3 UILR 523,
the plaintiffs agreed to sell to the defendants one of their second-hand linotype machine. It was

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agreed between them that the plaintiffs should keep the machine on their premises for the work of the
defendants until such time as service of an operator to work the machine would be available to the
defendants. It was held that the buyer had already taken delivery of the object of the sale contract in
the premises of the seller according to the terms of the contract, even though the object was agreed to
remain in the premises until the buyer was in a position to physically take delivery.

Method of Delivery

Generally, there are six methods in which delivery can take place;

1. Direct physical transfer of goods to the buyer: this is sometimes refers to as actual or
physical delivery. It is the commonest method of delivery of goods which involves no
technicality whatsoever. It is the physical transfer of the goods themselves to the buyer or to
his or her duly accredited agent or representative. The act of parting with possession by the
seller to the buyer is direct in this regard.
2. Symbolic delivery: here the seller may transfer possession of the goods to the buyer by
handing over to him the means of control over the goods, the subject matter of the contract,
like a key to the seller‟s warehouse. Such a delivery occurs where the seller delivers to the
buyer a symbolic means of acquiring the subject matter such a giving him a key to the
warehouse where the goods are stored or the delivery of the key to a car which is the subject
matter of the contract. This method of delivery was affirmed in the case of Hilton v. Tucker
(1888) 39 Ch. 699.
3. Constructive delivery: under this method, the buyer is already in possession of the goods at
the time of sale. But once the sale is effected, the character of the possession changes from
possession as a bailee to possession as a buyer while that of the seller changes from bailor to
seller. Also the parties may agree that the seller should hold the goods as the buyer‟s agent or
bailee until the buyer requires them. This suffices to transfer of possession of the goods to the
buyer and operates as constructive delivery.
4. By attornment: this occurs where the goods, the subject of the contract, are in possession of
a third party. Section 29(3) SGA provides inter alia: “Where the goods at the time of sale are
in possession of the third party, there is no delivery by the seller to the buyer unless and until
such third party acknowledges to the buyer that he holds the goods on his behalf”. This
acknowledgment is called attornment and it is of special importance where the goods are in
custody of warehousemen. If for example, „A‟ sells to „B‟ 100 bags of beans stored at the
warehouse of „C‟, the property may pass as soon as the contract is made but delivery will not
take place until „C‟ atones to be by the said acknowledgment that he holds the goods on
behalf of „B‟. This can be done by „C‟ by accepting a delivery warrant issued by „A‟ (the
seller) to „B‟ (the buyer). In Sterns Ltd v. Vickers Ltd (1923) 1 KB 98, the defendants sold to
the plaintiffs 120,000 gallons of spirit, which was part of a total quantity of 200,000 gallons in
a storage tank belonging to a third party. The plaintiffs obtained a delivery order which the
third party accepted but the plaintiffs decided to leave the spirit in the tank for the time being
for their own convenience. The spirit deteriorated in quality between the time of sale and the
time when the plaintiffs eventually took delivery of the 120,000 gallons. It was held that risk
had passed to the buyers. This is justified under section 29(3) SGA since the third party had
already attorned – accepted that he was holding the goods on behalf of the buyers and thus,
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became their agent from that moment. Such acknowledgment can be inferred from the
conduct of the warehouseman as in the case where, on receipt of the warrant, „C‟ releases
goods to „B‟. It must be noted however that mere receipt of the delivery note or order without
any comment by the warehouseman does not amount to attornment. In D.F. Mount Ltd v. J &
J Provisions Company Ltd (1960) 1 Q.B. 159, there was a sale of 250 cartons of tinned
peaches, deposited at the wharf and the layers explained to the seller that the price would be
paid out of money recovered from the sub-buyer. The seller made out delivery order in favour
of the buyer. The buyer did sell the peaches to x lend made out a fresh delivery order in x‟s
favour but never paid the original sellers. The Court pointed out that the original sellers knew
the buyer could only pay for the peaches out of man obtained from sub-buyers. The true
inference was that the original sellers assented to the resale in the sense that they intended to
renounce their original right agent not the goods and take the risk of the buyer‟s dishonesty
5. By delivering document of title: the goods may be delivered by the delivery of document of
titles to the buyer as provided under section 2(1) of the Factor Act 1889. The peculiar feature
of document of title is that the transfer or endorsement of the document if accompanied by
necessary intention would suffice to transfer of possession and property in the goods even
without attornment. When therefore a seller endorses and delivers a bill of lading to the buyer,
this operates as delivery of the goods themselves to the buyer.
6. Delivery of goods to the buyer’s agent: delivery of the goods to the buyer‟s agent transfers
possession to the buyer himself. Note that delivery to a carrier is prima facie delivery to the
buyer. Section 32 SGA provides thus: “Where in pursuance of a contract of sale, the seller is
authorized or required to send the goods to the buyer, delivery of the goods to carrier, whether
named by the buyer or not, for the purpose of transmission to the buyer is prima facie deemed
to be a delivery of the goods to the buyer”. But where the carrier is the seller‟s agent or
servant, delivery to him cannot constitute delivery to the buyer because this is like delivering
the goods to the seller himself.

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Business Law – BUL 311

Question 2

Who is an unpaid seller? Discuss his real remedies

Answer

By virtue of Section 38(1) SGA the seller of goods is deemed to be an “unpaid seller”

(a) When the whole of the price has not been paid or tendered;

(b) When a bill of exchange or other negotiable instrument has been received as conditional payment
and the condition on which it was received has not been fulfilled by reason of dishonour of the
instrument or otherwise.

The term seller includes any person who is in the position of a seller, as, for instance, an agent
of the seller to whom the bill of lading has been endorsed, or a consignor or agent who has himself
paid, or is directly responsible for the price.

Remedies of the unpaid seller

Meaning of Remedy

Remedy refers to legal means of enforcing a right or of providing redress. Black’s Law
Dictionary 10th edition defines remedy as “the options or right available to parties to a contract of
sale in the event of breach.

Where the buyer has committed a breach of the sale contract, the seller has primarily a remedy
against him in an action. The remedies of the seller who is unpaid (i.e. unpaid seller) can be classified
into two, viz;

1. Real remedies, and

2. Personal remedies

The focus here is on the real remedies of unpaid seller otherwise known as rights in rem.
Because the right to sue the buyer may not be enough as litigation is sometime precarious, time
consuming and expensive, the Sale of Goods Act therefore gives the seller certain other remedies
against the goods themselves as a means of protection. The real remedies of unpaid seller are
remedies against the goods themselves. However, in practice these remedies may prove to be
relatively unimportant as they depend essentially on the goods not having reached the buyer or his
agent. These real remedies include;

a. Right of a lien – sections 41-43 of the SGA

b. Right of stoppage in transitu – sections 44-46
c. Right of retention of the goods coextensive with the right of a lien and of stoppage in transitu
– section 39(2) SGA
d. Right of resale – section 48 SGA,

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Right of a lien – sections 41-43 of the SGA

A common reason for non-payment by the buyer is because he has no money, or lacks any
present ability to pay the price. In these circumstances, the seller‟s right to sue for the price or for
damages may be worthless and he will often prefer simply to keep the goods.

An unpaid seller‟s lien is a right to retain the goods until full payment has been made or
tendered by or on behalf of the buyer. It is an equitable lien primarily designed to afford protection to
the unpaid seller so long as the buyer or his agent has not acquire actual possession of the goods. It is
a special or particular lien which attaches to particular goods and only as security for the payment of
the purchase price due on them.

The law therefore gives the buyer certain rights; one of which is the right of a lien as identified
in section 41(1) SGA which provides that unpaid seller has a right in three cases. The section
provides as follows: “Subject to the provisions of this Act, the unpaid seller of goods who is in
possession of them is entitled to retain possession of them until payment or tender of the price in the
following cases:

a. Where the goods have been sold without any stipulation as to credit;
b. Where the goods have been sold on credit but the terms of credit has expired (that is, the
period of compulsive credit has elapsed); or
c. Where the buyer becomes insolvent.

By virtue of subsection (2) of the above section, the seller may exercise his right of lien
notwithstanding that he is in possession of the goods as agent or bailee or custodian for the buyer. It
is important to mention that this subsection is an exception to the rule of agency.

Definition of a lien

Nowhere in the statute is the concept lien defined, but we can call in judicial aid. In Harmon v.
Berkley (1802) 2 East 227, a lien was defined as follows; “A lien is the right of one man to retain that
which is in his possession belonging to another till certain demands on him, the person in possession
are satisfied”.

In the Nigeria case of Afrotech Technical Serivices (Nig) Ltd v. MIA & Sons Ltd [2000] 15
NWLR (Pt. 692) 730, the Supreme Court also defined lien as right at common law in one man to
retain that which is rightfully and continuously in his possession belonging to another until the
present and accrued claim of the person in possession are satisfied. In the primary sense, it is the right
given by law and not by contract.

A seller‟s lien covered by section 41 SGA is therefore a right whereby an unpaid seller of goods
who is in possession of them is entitled to retain possession of them, the property of which has passed
to the buyer. It is a valuable security for him especially when it is linked with the power of sale of an
unpaid seller. But the unpaid seller‟s lien is a special or particular lien which arises only in precise
circumstances specified by the Act. It is therefore not a general lien and the unpaid seller can only
exercise his lien over the particular goods in his possession which has not been paid for by the buyer
and not all the buyer‟s goods in his possession part of which the buyer may have paid for.

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When does a lien arise?

There are three ways in which lien arise. In other words, the seller‟s lien arises if three conditions are
satisfied;

1. The seller must be in possession of the goods: for his right of lien to arise, the seller must be
in possession of the goods. The lien entitles the unpaid seller of goods to “retain possession”
of them and not to “regain possession” of goods after he has given them up. Note however
that seller‟s right of stoppage in transitu may enable him regain possession of the goods.
2. The seller must be an unpaid seller as defined by section 38 SGA: for his right of lien to
arise, the seller must be an unpaid seller within the meaning of section 38 SGA. Therefore,
the whole of the price must be paid before the buyer can be said to have discharge the lien.
However, where the contract is for delivery by instalments which are to be paid for
separately, the buyer‟s default with regards to one instalment does not give the seller a right to
refuse to deliver future instalments. But where there is part delivery of the goods, an unpaid
seller may exercise his lien or right of retention over the remainder of the delivery. Section 42
SGA provides that where an unpaid seller has made part delivery of the goods, he may
exercise his right of lien or retention of the remainder, unless such part delivery has been
made under such circumstances as to show an agreement to waive the lien or right of
retention.
3. The goods must have been sold without any stipulation as to credit, or the stipulated
period of credit has expired, or the buyer has become insolvent. Where the term of the
credit expires, the seller becomes entitle to the goods. Where the buyer becomes insolvent, the
seller is entitled to a lien over the goods in his possession. Section 62(3) SGA defines
insolvency as follows: “A person is deemed to be insolvent within the meaning of this Act if
he has either ceased to pay his debts in the ordinary course of business or he cannot pay his
debts as they become due, whether or not he has committed an act of bankruptcy”.

It is important to stress that the mere fact that a buyer becomes insolvent or bankrupt does not
rescind the contract or amount to a repudiation of it. Therefore the trustee in bankruptcy could tender
the amount due to the seller and claim delivery of the goods. But where this is not done, the seller can
exercise a line over the goods in his possession. However, the important point to note is that even if
the seller had sold the goods on credit, he can refuse to deliver if the buyer becomes insolvent.

Termination of a Lien

By virtue of section 43(1) SGA, a lien is terminated in the circumstances provided for in this
particular section. These circumstances include:

a. When he delivers the goods to a carrier or other bailee or custodian for the purpose of
transmission to the buyer without reserving the right of disposal of the goods. Delivery to a
career or bailee for the buyer is deemed to be delivery to the buyer and therefore operates to
destroy the seller‟s lien (but not his right of stoppage in transitu) where the seller does not
reserve the right of disposal.
b. When the buyer or his agent lawfully obtains possession of the goods. Since possession is
essential to the maintenance of a lien, it naturally follows that when the buyer or his agent

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lawfully obtain possession of the goods, the lien is lost. The word „lawfully‟ means „with the
consent of the seller‟. So, if the buyer obtains possession of the goods without the consent of
the seller, this will not terminate the lien.
c. By waiver thereof. Waiver arises where one party leads the other to believe that he will not
insist on the precise stipulation in the contract, for example, the time of performance of the
contract and the other party has acted on that belief and is thereby prejudice by the act of the
other (the seller), such a seller cannot afterwards insists on the terms of the original contract.
This is the position of the Supreme Court in Afrotech’s case supra. Though waiver may be by
express stipulation in the contract, in the majority of cases however, it arises by implication.
An express waiver usually takes the form of some grant of a period of credit, which may be
included in the terms of the contract. Such grant has the effect of postponing the time of
payment and thereby waiving any right of lien that might otherwise accrue, at least until the
expiration of the period of credit. An example of a waiver is where the seller allows the
buyer‟s credit. In D.F. Mount Ltd v. Jay & Jay Provisions Company Ltd (1960) 1 Q.B. 159,
the original contract contained a provision that the goods (peaches) should be re-sold and that
the price was to be paid out of the money which the buyer was to receive from the sub-buyer.
Salmon, J. held that the sellers have assented to the re-sale within the meaning of section 47
SGA.
d. By subsequent payment of the price. It is important to mention that section 43(1) SGA is not
exhaustive of the circumstances in which the seller‟s lien is lost. So, apart from the above
three ways, a fourth one can be identified. That is that if the price is paid or tendered by the
buyer subsequently. Since the reason for retaining the goods by the unpaid seller is predicated
on the inability of the buyer to pay the price, it behoves on the unpaid seller to deliver the
good upon payment of the price by the buyer. The seller therefore ceases to be an unpaid
seller and therefore loses the lien as soon as the contract price is paid.

The right of stoppage in transitu

The right of an unpaid seller to stop the goods in transitu (in transit) is provided for under
section 44 SGA, particularly sections 44-46 SGA. The importance of this right is that it entitles the
unpaid seller not only to interfere with goods which are with someone not his agent or his servant,
but also with goods vested with some other person. Section 44 SGA provides inter alia: “Subject to
the provisions of this Act, when the buyer of goods becomes insolvent, the unpaid seller who has
parted with the possession of the goods has the right of stopping them in transitu...” In most cases the
property will have passed to the buyer upon delivery to a carrier, so long as the buyer or his agent has
not taken possession, the seller‟s right of stoppage in transitu remains operational.

The unpaid seller can exercise his right of stoppage in transitu if the following conditions are
satisfied;

1. The seller must be unpaid within the meaning of SGA

2. The buyer must be insolvent
3. The goods must be in the course of transit

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Goods are deemed to be in the course of transit from the time they are delivered to a carrier by
land, by sea, by rail or other bailee or custodian for the purpose of transmission to the buyer until the
buyer or his agent in that behalf takes delivery of them from such carrier or other bailee or custodian.
Goods are in transit when they have passed out of the possession of the seller into the possession of
the carrier but have not yet reached the buyer or his agent.

When does a transit end or abate?

i. When the buyer or his agent lawfully obtains delivery of the goods: Section 32(1) SGA
provides that delivery to a carrier is prima facie delivery to the buyer. However, this is only
constructive delivery and not actual delivery. So when the buyer or his agent actually obtains
delivery of the goods, the transit and stoppage are at an end because the buyer is now in
possession. If these were not so, section 32(1) SGA will be inconsistent with the whole
process of stoppage in transitu because the right postulates delivery to a carrier but not
delivery to a buyer. Section 32 SGA must therefore be read subject to section 45 SGA. In other
words, the mere delivery to a carrier does not give the buyer possession and therefore does
not destroy the right of stoppage. Section 45(1) SGA provides inter alia that until the buyer or
his agent in that behalf takes delivery of the goods on transit from the carrier or custodian or
bailee, the goods are deemed to be on transit. In effect, the transit ends as soon as the buyer or
his agent in that behalf takes delivery of the goods. Section 45(2) SGA gives a clear scenario
as to when a transit is said to be at an end. Thus, it provides that if the buyer or his agent in
that behalf obtains delivery of the goods before their arrival at the appointed destination, the
transit is at an end.
ii. When acknowledgment by the carrier or other bailee or custodian to the buyer or his
agent has taken place after the arrival of the goods. Section 45(3) SGA provides that if
after the arrival of the goods at the appointed destination, the carrier or other bailee or
custodian acknowledges to the buyer or his agent that he holds the goods on his behalf and
then continues in possession of them as bailee or custodian for the buyer or his agent, the
transit is at an end and it is immaterial that a further destination of the goods may have been
indicated by the buyer. This provision was given judicial interpretation in the case of Reddall
v. Union Castle Mail Steamship Co. Ltd (1914) 84 LJKB 360 where the buyer intercepted the
goods at the end of one stage in their transit and the goods were still in the custody of a
carrier, it was held that transit had ended.
iii. Section 45(5) SGA provides that when the goods are delivered to a ship chattered by the
buyer, it is a question depending on the circumstances of the particular case, whether they are
in the possession of the master as a carrier, or as agent to the buyer. What can be deduced
from the above are that where the goods are transported in a ship own by the buyer, delivery
to the master of the ship for the purpose of transmission to the buyer is a delivery to the
buyer‟s agent. Also where the control of the ship is vested in the buyer, the master is treated
as his employee and so delivery to him terminates the transit. However, if the ship is merely
chattered by the buyer for a ... or a fixed period, the master of the ship remains the servant of
the ship owner and does not become the agent of the buyer so that delivery to the ship does
not end the right of stoppage.

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iv. Section 45(6) SGA provides that where the carrier or other bailee wrongfully refuses to
deliver the goods to the buyer or his agent in that behalf, a transit is deemed to be at an end.

Right of Retention

Section 39 SGA grants the unpaid seller‟s right to withhold delivery of the goods where the
property in the goods has not passed to the buyer. This right is similar and coextensive with the
seller‟s right of lien and of stoppage in transitu when the property has passed to the buyer.

Right of Resale

The unpaid seller‟s right of lien, stoppage in transitu and retention are frequently exercised
with a view to ultimate re-sale of the goods. Section 48 SGA deals with the right of the second buyer
and the position as between the seller and the original buyer (the initial buyer). Where the unpaid
seller executes his right of resale under this section, the second buyer acquires a good title to the
goods as against the original buyer in the following circumstances:

i. If the seller is still the owner of the goods at the time of resale, that is, property has not passed to
the buyer for reason that he may not have paid the price on requirement. It is important to stress
that even if property has passed to the buyer, the unpaid seller can convey good title to the
second buyer as a seller in possession and then account to the first/original buyer
ii. Under section 48(2) SGA, after an unpaid seller has exercise his right of lien or stoppage in
transitu and then re-sells, the second buyer acquires good title. The second buyer here is
protected even if the seller‟s re-sale is wrongful as against the original buyer. The re-sale would
be wrongful, it must be noted, if it was necessary to give notice and no notice was given to the
original buyer before the re-sale. The seller would be obliged to account to the original buyer for
any such sale. The rationale behind the unpaid seller accounting to the original buyer of the re-
sale is because a contract of sale is not rescinded by the mere exercise by unpaid seller of his
right of lien or retention or stoppage in transitu. Since the reason for retaining the goods by the
unpaid seller is predicated on the inability of the buyer to pay the price, it behoves on the unpaid
seller to deliver the good upon payment of the price by the buyer or where the buyer fails to pay
the price and the seller re-sold, the latter must account to the original buyer and refund any extra
money after deducting the original price and the cost of re-sale, and where the present market
price has fallen and the unpaid seller incurred a loss from the re-sale, he can bring an action
against the original buyer to recover the differences.
iii. Where the goods are of perishable nature, a notice of re-sale to the original buyer is not
necessary. On the other hand, where the goods are not perishable goods, the seller is duty bound
to give notice to the original buyer of his intention to re-sell and would incur no liability where
the original buyer does not within a reasonable time pay or tender the price. Section 48(3) SGA
gives the unpaid seller right to resell the goods and recover from the original buyer damages for
any loss occasioned by his breach of contract. That section provides; “Where the goods are of
perishable nature, or where the unpaid seller gives notice to the buyer of his intention to re-sell
and the buyer does not within a reasonable time pay or tender the price, the unpaid seller may re-
sell the goods and recover from the original buyer damages for any loss occasioned by his breach
of contract”.

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iv. Where the unpaid seller re-sells as mercantile agent, the second buyer acquires good title. The
expression “mercantile agent” is defined under section 1(1) of the Factor Act 1889 as meaning
“A mercantile agent having in the customary course of his business as such agent authority either
to sell the goods, or to consign goods for the purpose of sale, or to buy goods, or to raise money
on the security of the goods”. It is important to mention that the exercise of the right of lien or of
stoppage in transitu will usually result in re-sale of the goods by the seller if the buyer continues
to make default in payment of the price. The right of re-sale is a very useful one and can be
exercised under the following situations
a. Where the seller still has the property in the goods
b. Where even though the property has passed, the seller is in possession of the goods within
the meaning of section 25(1) SGA, or section 8 of the Factor Act 1889.
c. Even though the property in the goods has passed, if the seller exercises his right of lien or
stoppage in transitu, he will enjoy the power to re-sell the goods. This is laid down under
section 48(2) SGA which states that where an unpaid seller who has exercised his right of
lien or retention or stoppage in transitu re-sells the goods, the buyer acquires a good title
thereto as against the original buyer. This sub-section may be taken to be wider than section
25(1) SGA or section 8 of the Factors Act for two reasons. First, it presumably means that
even though the property has passed to the first buyer, if the seller exercises his right of lien
or stoppage, he has the power to re-sell the goods, passing a good title to a third party, even
though he could not have done so under section 25(1) SGA. In other words, section 48(2)
SGA envisages the possibility of a re-sale by a seller not in possession of the goods. Second,
under section 48(2) SGA, it is necessary to show that the buyer from such seller must have
acted in good faith and without notice of the previous sale as required by the provision of
section 25(1) SGA. It must be stated here that where the second buyer is already aware of the
defect in the seller‟s title and goes ahead to buy, or even does any act aimed at persuading the
seller to sell to him, the law will not protect him.
d. Where the seller expressly reserves a right of re-sale in case the buyer should make default.

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Question 3

In February 2016, a seller of some scientific equipment, way back Australia, entered a
contract of sale worth 10 million dollars ($10m) with ABC company Ltd in Edo State. The
seller agreed to deliver the goods by rail to the buyer. These goods were so delivered to a
carrier at the “buyer‟s risk” to the buyer. They were damaged as a result of lack of proper
care. The buyer who had opportunity of knowing and reacting to the goods on delivery
promptly rejected delivery. Aggrieved by this rejection, the seller has approached you to bring
an action in court against the buyer with a view to compelling the buyer to accept delivery.
Examine the chances of success of the seller against the background of statutory and judicial
authorities.

Answer

The issue to be determined in this hypothetical case is whether the seller had make a reasonable
contract of carriage in which case the buyer was duty bound to accept delivery of the goods. This can
be stated in the alternative, whether the seller had failed to make a reasonable contract of carriage in
which case the buyer (ABC Company Ltd) is entitled to reject delivery of the goods

The rule is that unless otherwise authorized by the buyer, the seller must make such contract
with the carrier on behalf of the buyer as may be reasonable having regards to the nature of the goods
and other circumstances of the case, and if the seller omits, so to do, and the goods are lost or
damaged in the course of transit, the buyer may decline to treat the delivery to the carrier as delivery
to himself or may hold the seller responsible in damages. This rule enjoys statutory backing by virtue
of Section 32(2) SGA and has found judicial approval in the case of Thomas Young & Sons Ltd v.
Hobson & Partners.

Section 32(2) SGA provides thus: “Unless otherwise authorized by the buyer, the seller must
make such contract with the carrier on behalf of the buyer as may be reasonable having regards to the
nature of the goods and other circumstances of the case, and if the seller omits, so to do, and the
goods are lost or damaged in the course of transit, the buyer may decline to treat the delivery to the
carrier as delivery to himself or may hold the seller responsible in damages. This provision was given
statutory interpretation and affirmation in the case of Thomas Young & Sons Ltd v. Hobson &
Partners supra. This hypothetical case is on all-fours with the facts of Thomas Young & Sons Ltd v.
Hobson & Partners supra. In that case, the seller of electric engines agreed to transport electric
engines to the buyer by railway wagons for onward transmission to the buyer. The goods were so
transported but the seller failed to secure them in the wagons as a result of which they were damaged.
At their destination, the buyer refused to accept them as they were transported “at owner‟s risk” (that
is, buyer‟s risk) which meant that the buyer had no remedy against the carrier. It was proved that the
sellers could have consigned the goods at identical rate and at the company‟s risk (that is, the seller‟s
risk) in which case the railway authorities would have ensured that they were properly secured. The
Court of Appeal held that the seller had failed to make a reasonable contract of carriage, and the
buyers were entitled to refuse to take delivery of the goods.

Applying these facts to this hypothetical case, it is obvious that the seller had failed to make a
reasonable contract of carriage with the carrier. In which case, the seller is in breach of Section 32(2)

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SGA. That fact that the seller delivered the goods to the carrier at the “buyer‟s risk” to the buyer gave
the carrier the impetus to be careless with the handling of the goods. The damage to the goods could
have been avoid had the seller delivered the goods at his own (seller‟s) risk in which case the carrier
would have handled the goods with proper care.

Delivery is defined in section 62 SGA as a voluntary transfer of possession from one person to
another. Since ABC Company Ltd rejected delivery, there is therefore no transfer of possession. Even
though section 27 SGA, gives the seller duty to deliver the goods, and of the buyer to accept and pay
for them, in accordance with the terms of the contract of sale, it can be argued that the section does
not contemplated delivery of defective goods.

Section 32(2) SGA gives ABC Company Ltd the right to decline to treat the delivery to the
carrier as delivery to himself or hold the seller responsible in damages, more so as the buyer had not
deal with the goods in a manner inconsistent with the ownership of the seller. There is no gainsaying
that the seller had failed to make such contract with the carrier on behalf of ABC Company Ltd (the
buyer) as may be reasonable having regards to the nature of the goods. The seller had failed to make
such reasonable contract of carriage and the goods are damaged in the course of transit, ABC is
therefore entitled to decline to treat the delivery to the carrier as delivery to himself or may hold the
seller responsible in damages.

Similarly, section 33 SGA gives ABC Company Ltd (the buyer) a right to claim against the
seller if the goods sent to him were in a defective condition where the seller had agreed to send the
goods at his own risk at a place other than that where they are when sold, and the buyer did not agree
to take any risk of deterioration in the goods necessarily incident to the course of carriage.

ABC Company Ltd has the right to reject delivery as the goods can be said to be no longer fit
for the purpose for which it was bought or the goods are not merchantable, in which case, the seller is
in breach of section 14 SGA.

Against the background of the statutory provisions of sections 32(2), 33, and 14 SGA, and the
judicial decision in Thomas Young & Sons Ltd v. Hobson & Partners supra, it is crystal clear that the
seller has no chances of success. He has not made a reasonable contract of carriage with the seller;
hence the buyer (ABC Company Ltd) is entitled to reject delivery and cannot be compelled to accept
delivery of scientific equipment, the subject matter of the contract, which has been damaged as a
result of the carelessness of the seller.

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Question 4(a)

Under what circumstance can a lien arise?

Definition of a lien

The term “lien” was defined in Harmon v. Berkley (1802) 2 East 227 as follows; “A lien is the
right of one man to retain that which is in his possession belonging to another till certain demands on
him, the person in possession are satisfied”.

In the Nigeria case of Afrotech Technical Serivices (Nig) Ltd v. MIA & Sons Ltd [2000] 15
NWLR (Pt. 692) 730, the Supreme Court also defined lien as right at common law in one man to
retain that which is rightfully and continuously in his possession belonging to another until the
present and accrued claim of the person in possession are satisfied. In the primary sense, it is the right
given by law and not by contract.

A seller‟s lien covered by section 41 SGA is therefore a right whereby an unpaid seller of goods
who is in possession of them is entitled to retain possession of them, the property of which has passed
to the buyer. It is a valuable security for him especially when it is linked with the power of sale of an
unpaid seller.

But the unpaid seller‟s lien is a special or particular lien which arises only in precise
circumstances specified by the Act. It is therefore not a general lien and the unpaid seller can only
exercise his lien over the particular goods in his possession which has not been paid for by the buyer
and not all the buyer‟s goods in his possession part of which the buyer may have paid for.

An unpaid seller‟s lien is a right to retain the goods until full payment has been made or
tendered by or on behalf of the buyer. It is an equitable lien primarily designed to afford protection to
the unpaid seller so long as the buyer or his agent has not acquire actual possession of the goods. It is
a special or particular lien which attaches to particular goods and only as security for the payment of
the purchase price due on them.

When does a lien arise?

There are three ways in which lien arise. In other words, the seller‟s lien arises if three conditions are
satisfied;

1. The seller must be in possession of the good: for his right of lien to arise, the seller must be in
possession of the goods. The lien entitles the unpaid seller of goods to “retain possession” of them
and not to “regain possession” of goods after he has given them up. Note however that seller‟s
right of stoppage in transitu may enable him regain possession of the goods.
2. The seller must be an unpaid seller as defined by section 38 SGA: for his right of lien to arise,
the seller must be an unpaid seller within the meaning of section 38 SGA. Therefore, the whole of
the price must be paid before the buyer can be said to have discharge the lien. However, where the
contract is for delivery by instalments which are to be paid for separately, the buyer‟s default with
regards to one instalment does not give the seller a right to refuse to deliver future instalments. But
where there is part delivery of the goods, an unpaid seller may exercise his lien or right of

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retention over the remainder of the delivery. Section 42 SGA provides that where an unpaid seller
has made part delivery of the goods, he may exercise his right of lien or retention of the
remainder, unless such part delivery has been made under such circumstances as to show an
agreement to waive the lien or right of retention.
3. The goods must have been sold without any stipulation as to credit, or the stipulated period
of credit has expired, or the buyer has become insolvent. Where the term of the credit expires,
the seller becomes entitle to the goods. Where the buyer becomes insolvent, the seller is entitled to
a lien over the goods in his possession. Section 62(3) SGA defines insolvency as follows: “A
person is deemed to be insolvent within the meaning of this Act if he has either ceased to pay his
debts in the ordinary course of business or he cannot pay his debts as they become due, whether or
not he has committed an act of bankruptcy”.

It is important to stress that the mere fact that a buyer becomes insolvent or bankrupt does not
rescind the contract or amount to a repudiation of it. Therefore the trustee in bankruptcy could tender
the amount due to the seller and claim delivery of the goods. But where this is not done, the seller can
exercise a line over the goods in his possession. However, the important point to note is that even if
the seller had sold the goods on credit, he can refuse to deliver if the buyer becomes insolvent.

Question 4(b)

Advice an unpaid seller as to when he will lose his right of a lien

Termination of a Lien

By virtue of section 43(1) SGA, an unpaid seller will lose his right of a lien under the following
circumstances. These circumstances include:

a. When he delivers the goods to a carrier or other bailee or custodian for the purpose of
transmission to the buyer without reserving the right of disposal of the goods. Delivery to
a carrier or bailee for the buyer is deemed to be delivery to the buyer and therefore operates to
destroy the seller‟s lien (but not his right of stoppage in transitu) where the seller does not
reserve the right of disposal.
b. When the buyer or his agent lawfully obtains possession of the goods. Since possession is
essential to the maintenance of a lien, it naturally follows that when the buyer or his agent
lawfully obtain possession of the goods, the lien is lost. The word „lawfully‟ means „with the
consent of the seller‟. So, if the buyer obtains possession of the goods without the consent of
the seller, this will not terminate the lien.
c. By waiver thereof. Waiver arises where one party leads the other to believe that he will not
insist on the precise stipulation in the contract, for example, the time of performance of the
contract and the other party has acted on that belief and is thereby prejudice by the act of the
other (the seller), such a seller cannot afterwards insists on the terms of the original contract.
This is the position of the Supreme Court in Afrotech’s case supra. Though waiver may be by
express stipulation in the contract, in the majority of cases however, it arises by implication.
An express waiver usually takes the form of some grant of a period of credit, which may be
included in the terms of the contract. Such grant has the effect of postponing the time of
payment and thereby waiving any right of lien that might otherwise accrue, at least until the

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expiration of the period of credit. An example of a waiver is where the seller allows the
buyer‟s credit. In D.F. Mount Ltd v. Jay & Jay Provisions Company Ltd (1960) 1 Q.B. 159,
the original contract contained a provision that the goods (peaches) should be re-sold and that
the price was to be paid out of the money which the buyer was to receive from the sub-buyer.
Salmon, J. held that the sellers have assented to the re-sale within the meaning of section 47
SGA.
d. By subsequent payment of the price. It is important to mention that section 43(1) SGA is not
exhaustive of the circumstances in which the seller‟s lien is lost. So, apart from the above
three ways, a fourth one can be identified. That is that if the price is paid or tendered by the
buyer subsequently. Since the reason for retaining the goods by the unpaid seller is predicated
on the inability of the buyer to pay the price, it behoves on the unpaid seller to deliver the
good upon payment of the price by the buyer. The seller therefore ceases to be an unpaid
seller and therefore loses the lien as soon as the contract price is paid.

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Question 5

A „diploma in law‟ student is soon to write his project on “the various remedies of an unpaid
seller”. He has approached you to guide him in this task. What are the factors to be
considered?

Answer

By virtue of Section 38(1) SGA the seller of goods is deemed to be an “unpaid seller”

(a) When the whole of the price has not been paid or tendered;

(b) When a bill of exchange or other negotiable instrument has been received as conditional payment
and the condition on which it was received has not been fulfilled by reason of dishonour of the
instrument or otherwise.

Remedies of the unpaid seller

Meaning of Remedy

Remedy refers to legal means of enforcing a right or of providing redress. Black’s Law
Dictionary 10th edition defines remedy as “the options or right available to parties to a contract of
sale in the event of breach.

Where the buyer has committed a breach of the sale contract, the seller has primarily a remedy
against him in an action. The remedies of the seller who is unpaid (i.e. unpaid seller) can be classified
into two, viz;

3. Real remedies, and

4. Personal remedies

Because the right to sue the buyer may not be enough as litigation is sometime precarious, time
consuming and expensive, the Sale of Goods Act therefore gives the seller certain other remedies
against the goods themselves as a means of protection. The real remedies of unpaid seller are
remedies against the goods themselves. However, in practice these remedies may prove to be
relatively unimportant as they depend essentially on the goods not having reached the buyer or his
agent. These real remedies include;

e. Right of a lien – sections 41-43 of the SGA

f. Right of stoppage in transitu – sections 44-46
g. Right of retention of the goods coextensive with the right of a lien and of stoppage in transitu
– section 39(2) SGA
h. Right of resale – section 48 SGA,

Personal remedies – rights in personam

The personal remedies of a seller include

a. Right to sue for the price – section 49 SGA, and

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b. Action for damages for non-acceptance of delivery

Right of a lien – sections 41-43 of the SGA

A common reason for non-payment by the buyer is because he has no money, or lacks any
present ability to pay the price. In these circumstances, the seller‟s right to sue for the price or for
damages may be worthless and he will often prefer simply to keep the goods.

An unpaid seller‟s lien is a right to retain the goods until full payment has been made or
tendered by or on behalf of the buyer. It is an equitable lien primarily designed to afford protection to
the unpaid seller so long as the buyer or his agent has not acquire actual possession of the goods. It is
a special or particular lien which attaches to particular goods and only as security for the payment of
the purchase price due on them.

The law therefore gives the buyer certain rights; one of which is the right of a lien as identified
in section 41(1) SGA which provides that unpaid seller has a right in three cases. The section
provides as follows: “Subject to the provisions of this Act, the unpaid seller of goods who is in
possession of them is entitled to retain possession of them until payment or tender of the price in the
following cases:

a. Where the goods have been sold without any stipulation as to credit;
b. Where the goods have been sold on credit but the terms of credit has expired (that is, the
period of compulsive credit has elapsed); or
c. Where the buyer becomes insolvent.

By virtue of subsection (2) of the above section, the seller may exercise his right of lien
notwithstanding that he is in possession of the goods as agent or bailee or custodian for the buyer. It
is important to mention that this subsection is an exception to the rule of agency.

Definition of a lien

Nowhere in the statute is the concept lien defined, but we can call in judicial aid. In Harmon v.
Berkley (1802) 2 East 227, a lien was defined as follows; “A lien is the right of one man to retain that
which is in his possession belonging to another till certain demands on him, the person in possession
are satisfied”.

In the Nigeria case of Afrotech Technical Serivices (Nig) Ltd v. MIA & Sons Ltd [2000] 15
NWLR (Pt. 692) 730, the Supreme Court also defined lien as right at common law in one man to
retain that which is rightfully and continuously in his possession belonging to another until the
present and accrued claim of the person in possession are satisfied. In the primary sense, it is the right
given by law and not by contract.

A seller‟s lien covered by section 41 SGA is therefore a right whereby an unpaid seller of goods
who is in possession of them is entitled to retain possession of them, the property of which has passed
to the buyer. It is a valuable security for him especially when it is linked with the power of sale of an
unpaid seller. But the unpaid seller‟s lien is a special or particular lien which arises only in precise
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circumstances specified by the Act. It is therefore not a general lien and the unpaid seller can only
exercise his lien over the particular goods in his possession which has not been paid for by the buyer
and not all the buyer‟s goods in his possession part of which the buyer may have paid for.

There are three ways in which lien arise. In other words, the seller‟s lien arises if three
conditions are satisfied;

1. The seller must be in possession of the good: for his right of lien to arise, the seller must be
in possession of the goods. The lien entitles the unpaid seller of goods to “retain possession”
of them and not to “regain possession” of goods after he has given them up. Note however
that seller‟s right of stoppage in transitu may enable him regain possession of the goods.
2. The seller must be an unpaid seller as defined by section 38 SGA: for his right of lien to
arise, the seller must be an unpaid seller within the meaning of section 38 SGA. Therefore,
the whole of the price must be paid before the buyer can be said to have discharge the lien.
However, where the contract is for delivery by instalments which are to be paid for
separately, the buyer‟s default with regards to one instalment does not give the seller a right to
refuse to deliver future instalments. But where there is part delivery of the goods, an unpaid
seller may exercise his lien or right of retention over the remainder of the delivery. Section 42
SGA provides that where an unpaid seller has made part delivery of the goods, he may
exercise his right of lien or retention of the remainder, unless such part delivery has been
made under such circumstances as to show an agreement to waive the lien or right of
retention.
3. The goods must have been sold without any stipulation as to credit, or the stipulated
period of credit has expired, or the buyer has become insolvent. Where the term of the
credit expires, the seller becomes entitle to the goods. Where the buyer becomes insolvent, the
seller is entitled to a lien over the goods in his possession. Section 62(3) SGA defines
insolvency as follows: “A person is deemed to be insolvent within the meaning of this Act if
he has either ceased to pay his debts in the ordinary course of business or he cannot pay his
debts as they become due, whether or not he has committed an act of bankruptcy”.

It is important to stress that the mere fact that a buyer becomes insolvent or bankrupt does not
rescind the contract or amount to a repudiation of it. Therefore the trustee in bankruptcy could tender
the amount due to the seller and claim delivery of the goods. But where this is not done, the seller can
exercise a line over the goods in his possession. However, the important point to note is that even if
the seller had sold the goods on credit, he can refuse to deliver if the buyer becomes insolvent.

By virtue of section 43(1) SGA, a lien is terminated in the circumstances provided for in this
particular section. These circumstances include, when he delivers the goods to a carrier or other
bailee or custodian for the purpose of transmission to the buyer without reserving the right of
disposal of the goods, when the buyer or his agent lawfully obtains possession of the goods and by
waiver thereof.

In addition to the above, the seller‟s lien also terminates when the buyer subsequently pays the
price of the goods.

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The right of stoppage in transitu

The right of an unpaid seller to stop the goods in transitu (in transit) is provided for under
section 44 SGA. This right entitles the unpaid seller not only to interfere with goods which are with
someone not his agent or his servant, but also with goods vested with some other person. Section 44
SGA provides inter alia: “Subject to the provisions of this Act, when the buyer of goods becomes
insolvent, the unpaid seller who has parted with the possession of the goods has the right of stopping
them in transitu...” In most cases the property will have passed to the buyer upon delivery to a
carrier, so long as the buyer or his agent has not taken possession, the seller‟s right of stoppage in
transitu remains operational.

The unpaid seller can exercise his right of stoppage in transitu if the following conditions are
satisfied;

4. The seller must be unpaid within the meaning of SGA

5. The buyer must be insolvent
6. The goods must be in the course of transit

Goods are deemed to be in the course of transit from the time they are delivered to a carrier by
land, by sea, by rail or other bailee or custodian for the purpose of transmission to the buyer until the
buyer or his agent in that behalf takes delivery of them from such carrier or other bailee or custodian.
Goods are in transit when they have passed out of the possession of the seller into the possession of
the carrier but have not yet reached the buyer or his agent.

This right of stoppage in transitu however abates under the following circumstances

1. When the buyer or his agent lawfully obtains delivery of the goods:
2. When acknowledgment by the carrier or other bailee or custodian to the buyer or his
agent has taken place after the arrival of the goods.
3. When the goods are delivered to a ship chattered depending on the circumstances of the
particular case however.
4. Even where the carrier or other bailee wrongfully refuses to deliver the goods to the buyer or
his agent in that behalf.

Right of Retention

Section 39 SGA grants the unpaid seller‟s right to withhold delivery of the goods where the
property in the goods has not passed to the buyer. This right is similar and coextensive with the
seller‟s right of lien and of stoppage in transitu when the property has passed to the buyer.

Right of Resale

The unpaid seller‟s right of lien, stoppage in transitu and retention are frequently exercised
with a view to ultimate re-sale of the goods. Section 48 SGA deals with the right of the second buyer
and the position as between the seller and the original buyer (the initial buyer). Where the unpaid
seller executes his right of resale under this section, the second buyer acquires a good title to the
goods as against the original buyer in the following circumstances:

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a. If the seller is still the owner of the goods at the time of resale, that is, property has not passed
to the buyer for reason that he may not have paid the price on requirement. It is important to
stress that even if property has passed to the buyer, the unpaid seller can convey good title to
the second buyer as a seller in possession and then account to the first/original buyer
b. Under section 48(2) SGA, after an unpaid seller has exercise his right of lien or stoppage in
transitu and then re-sells, the second buyer acquires good title. The second buyer here is
protected even if the seller‟s re-sale is wrongful as against the original buyer. The re-sale
would be wrongful, it must be noted, if it was necessary to give notice and no notice was
given to the original buyer before the re-sale. The seller would be obliged to account to the
original buyer for any such sale. The rationale behind the unpaid seller accounting to the
original buyer of the re-sale is because a contract of sale is not rescinded by the mere exercise
by unpaid seller of his right of lien or retention or stoppage in transitu. Since the reason for
retaining the goods by the unpaid seller is predicated on the inability of the buyer to pay the
price, it behoves on the unpaid seller to deliver the good upon payment of the price by the
buyer or where the buyer fails to pay the price and the seller re-sold, the latter must account to
the original buyer and refund any extra money after deducting the original price and the cost
of re-sale, and where the present market price has fallen and the unpaid seller incurred a loss
from the re-sale, he can bring an action against the original buyer to recover the differences.
c. Where the goods are of perishable nature, a notice of re-sale to the original buyer is not
necessary. On the other hand, where the goods are not perishable goods, the seller is duty
bound to give notice to the original buyer of his intention to re-sell and would incur no
liability where the original buyer does not within a reasonable time pay or tender the price.
Section 48(3) SGA gives the unpaid seller right to resell the goods and recover from the
original buyer damages for any loss occasioned by his breach of contract. That section
provides; “Where the goods are of perishable nature, or where the unpaid seller gives notice
to the buyer of his intention to re-sell and the buyer does not within a reasonable time pay or
tender the price, the unpaid seller may re-sell the goods and recover from the original buyer
damages for any loss occasioned by his breach of contract”.
d. Where the unpaid seller re-sells as mercantile agent, the second buyer acquires good title. The
expression “mercantile agent” is defined under section 1(1) of the Factor Act 1889 as
meaning “A mercantile agent having in the customary course of his business as such agent
authority either to sell the goods, or to consign goods for the purpose of sale, or to buy goods,
or to raise money on the security of the goods”. It is important to mention that the exercise of
the right of lien or of stoppage in transitu will usually result in re-sale of the goods by the
seller if the buyer continues to make default in payment of the price. The right of re-sale is a
very useful one and can be exercised under the following situations; (i) Where the seller still
has the property in the goods, (ii) Where even though the property has passed, the seller is in
possession of the goods within the meaning of section 25(1) SGA, (iii) Even though the
property in the goods has passed, if the seller exercises his right of lien or stoppage in
transitu, he will enjoy the power to re-sell the goods.
e. Where the seller expressly reserves a right of re-sale in case the buyer should make default.

Seller’s Personal Remedy - Action against the Buyer

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i. Action for the price: by virtue of section 49 SGA, where the property or ownership in the
goods has passed to the buyer or where specific date of payment was set and has passed, the
seller can sue for the contract price. In other words, where the price is payable on a day
certain irrespective of delivery, the seller can bring an action for price even if property has not
passed and the goods have not been appropriated to the contract.
ii. Action for damages for non-acceptance: section 50 SGA provides that where the buyer
refuses to accept delivery or pay for the goods, the seller may claim damages, the measure
being “the estimated loss directly and naturally resulting in the ordinary course of event from
the buyer‟s breach of contract”. Where between the contract and the date of delivery the
market price of such goods has fallen so that the seller will get less on a resale, the damages
will prima facie be the difference between the contract price and the market price at the time
when the goods should have been accepted. In the same vein, section 37 SGA provides that
when the seller is ready and willing to deliver the goods, and requests the buyer to take
delivery, and the buyer does not within a reasonable time after such request take delivery of
the goods, he is liable to the seller for any loss occasioned by his neglect or refusal to take
delivery, and also for a reasonable charge for the care and custody of the goods; provided that
nothing in this section shall affect the rights of the seller where the neglect or refusal of the
buyer to take delivery amounts to a repudiation of the contract.
iii. Damages following resale: Section 48(3) SGA provides that where the goods are of
perishable nature, or where the unpaid seller gives notice to the buyer of his intention to resell
and the buyer does not within a reasonable time pay or tender the price, the unpaid seller may
re-sell the goods and recover from the original buyer damages for any loss occasioned by his
breach of contract.
iv. Special damages: section 54 SGA provides thus: “Nothing in this Act shall affect the right of
...or the seller to recover interest or special damages in any case where by law interest or
special damages may be recoverable...”

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Question 6

With the aid of statutory and judicial authorities, account for the place of and method of
delivery of goods to the buyer

Answer

Delivery is one out of the two duties of the seller to the buyer. The term “delivery” is
defined under section 62 SGA as a voluntary transfer of possession from one person to
another. It may be important to mention that the rules governing delivery are essentially a
matter of agreement between the parties; and the rules contained in the Act only apply in so
far as no contrary agreement has been made.

Method of Delivery

Generally, there are six methods in which delivery can take place;

1. Direct physical transfer of goods to the buyer: this is sometimes refers to as actual or
physical delivery. It is the commonest method of delivery of goods which involves no
technicality whatsoever. It is the physical transfer of the goods themselves to the buyer or to
his or her duly accredited agent or representative. The act of parting with possession by the
seller to the buyer is direct in this regard.
2. Symbolic delivery: here the seller may transfer possession of the goods to the buyer by
handing over to him the means of control over the goods, the subject matter of the contract,
like a key to the seller‟s warehouse. Such a delivery occurs where the seller delivers to the
buyer a symbolic means of acquiring the subject matter such a giving him a key to the
warehouse where the goods are stored or the delivery of the key to a car which is the subject
matter of the contract. This method of delivery was affirmed in the case of Hilton v. Tucker.
3. Constructive delivery: under this method, the buyer is already in possession of the goods at
the time of sale. But once the sale is effected, the character of the possession changes from
possession as a bailee to possession as a buyer while that of the seller changes from bailor to
seller. Also the parties may agree that the seller should hold the goods as the buyer‟s agent or
bailee until the buyer requires them. This suffices to transfer of possession of the goods to the
buyer and operates as constructive delivery.
4. By attornment: this occurs where the goods, the subject of the contract, are in possession of
a third party. Section 29(3) SGA provides inter alia: “Where the goods at the time of sale are
in possession of the third party, there is no delivery by the seller to the buyer unless and until
such third party acknowledges to the buyer that he holds the goods on his behalf”. This
acknowledgment is called attornment and it is of special importance where the goods are in
custody of warehousemen. If for example, „A‟ sells to „B‟ 100 bags of beans stored at the
warehouse of „C‟, the property may pass as soon as the contract is made but delivery will not
take place until „C‟ atones to be by the said acknowledgment that he holds the goods on
behalf of „B‟. This can be done by „C‟ by accepting a delivery warrant issued by „A‟ (the
seller) to „B‟ (the buyer). In Sterns Ltd v. Vickers Ltd (1923) 1 KB 98, the defendants sold to
the plaintiffs 120,000 gallons of spirit, which was part of a total quantity of 200,000 gallons in
a storage tank belonging to a third party. The plaintiffs obtained a delivery order which the

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third party accepted but the plaintiffs decided to leave the spirit in the tank for the time being
for their own convenience. The spirit deteriorated in quality between the time of sale and the
time when the plaintiffs eventually took delivery of the 120,000 gallons. It was held that risk
had passed to the buyers. This is justified under section 29(3) SGA since the third party had
already attorned – accepted that he was holding the goods on behalf of the buyers and thus,
became their agent from that moment. Such acknowledgment can be inferred from the
conduct of the warehouseman as in the case where, on receipt of the warrant, „C‟ releases
goods to „B‟. It must be noted however that mere receipt of the delivery note or order without
any comment by the warehouseman does not amount to attornment. See D.F. Mount Ltd v. J
& J Provisions Company Ltd (1960) 1 Q.B. 159.
5. By delivering document of title: the goods may be delivered by the delivery of document of
titles to the buyer as provided under section 2(1) of the Factor Act 1889. The peculiar feature
of document of title is that the transfer or endorsement of the document if accompanied by
necessary intention would suffice to transfer of possession and property in the goods even
without attornment. When therefore a seller endorses and delivers a bill of lading to the buyer,
this operates as delivery of the goods themselves to the buyer.
6. Delivery of goods to the buyer’s agent: delivery of the goods to the buyer‟s agent transfers
possession to the buyer himself. Note that delivery to a carrier is prima facie delivery to the
buyer. Section 32 SGA provides thus: “Where in pursuance of a contract of sale, the seller is
authorized or required to send the goods to the buyer, delivery of the goods to carrier, whether
named by the buyer or not, for the purpose of transmission to the buyer is prima facie deemed
to be a delivery of the goods to the buyer”. But where the carrier is the seller‟s agent or
servant, delivery to him cannot constitute delivery to the buyer because this is like delivering
the goods to the seller himself.

Place of delivery

Section 29(1) SGA provides: “Whether it is for the buyer to take possession of the goods or for
the seller to send them to the buyer is a question depending in each case on the contract, express or
implied, between the parties. Apart from any such contract, express or implied, the place of delivery
is the seller‟s place of business, if he has one, and if not, his residence: Provided that if the contract
be for the sale of specific goods, which to the knowledge of the parties when the contract is made are
in some other place, then that place is the place of delivery.”

By the proviso in this section, if the contract is for the sale of specific goods which to the
knowledge of both parties at the time of the contract are in some other place, then the place is the
place of delivery. Thus, if „A‟ sold goods, a combine harvester lying at Ugbogui farm to „B‟ which
both parties knew to be in that farm, that Ugbogui farm will be the place of delivery of the farming
equipment. Thus, in Associated Press of Nigeria Ltd v. Philip (W.A.) Records Ltd (1973) 3 UILR 523,
the plaintiffs agreed to sell to the defendants one of their second-hand linotype machine. It was
agreed between them that the plaintiffs should keep the machine on their premises for the work of the
defendants until such time as service of an operator to work the machine would be available to the
defendants. It was held that the buyer had already taken delivery of the object of the sale contract in
the premises of the seller according to the terms of the contract, even though the object was agreed to
remain in the premises until the buyer was in a position to physically take delivery.
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Question 7

Under what circumstance will the right of stoppage in transitu abate?

Answer

The right of stoppage in transitu will abate under what circumstance:

i. When the buyer or his agent lawfully obtains delivery of the goods: Section 32(1) SGA
provides that delivery to a carrier is prima facie delivery to the buyer. However, this is only
constructive delivery and not actual delivery. So when the buyer or his agent actually obtains
delivery of the goods, the transit and stoppage are at an end because the buyer is now in
possession. If these were not so, section 32(1) SGA will be inconsistent with the whole
process of stoppage in transitu because the right postulates delivery to a carrier but not
delivery to a buyer. Section 32 SGA must therefore be read subject to section 45 SGA. In other
words, the mere delivery to a carrier does not give the buyer possession and therefore does
not destroy the right of stoppage. Section 45(1) SGA provides inter alia that until the buyer or
his agent in that behalf takes delivery of the goods on transit from the carrier or custodian or
bailee, the goods are deemed to be on transit. In effect, the transit ends as soon as the buyer or
his agent in that behalf takes delivery of the goods. Section 45(2) SGA gives a clear scenario
as to when a transit is said to be at an end. Thus, it provides that if the buyer or his agent in
that behalf obtains delivery of the goods before their arrival at the appointed destination, the
transit is at an end. This provision was given judicial interpretation in the case of Reddall v.
Union Castle Mail Steamship Co. Ltd (1914) 84 LJKB 360 where the buyer intercepted the
goods at the end of one stage in their transit and the goods were still in the custody of a
carrier, it was held that transit had ended.
ii. When acknowledgment by the carrier or other bailee or custodian to the buyer or his
agent has taken place after the arrival of the goods. Section 45(3) SGA provides that if
after the arrival of the goods at the appointed destination, the carrier or other bailee or
custodian acknowledges to the buyer or his agent that he holds the goods on his behalf and
then continues in possession of them as bailee or custodian for the buyer or his agent, the
transit is at an end and it is immaterial that a further destination of the goods may have been
indicated by the buyer.
iii. Section 45(5) SGA provides that when the goods are delivered to a ship chattered by the
buyer, it is a question depending on the circumstances of the particular case, whether they are
in the possession of the master as a carrier, or as agent to the buyer. What can be deduced
from the above are that where the goods are transported in a ship own by the buyer, delivery
to the master of the ship for the purpose of transmission to the buyer is a delivery to the
buyer‟s agent. Also where the control of the ship is vested in the buyer, the master is treated
as his employee and so delivery to him terminates the transit. However, if the ship is merely
chattered by the buyer for a ... or a fixed period, the master of the ship remains the servant of
the ship owner and does not become the agent of the buyer so that delivery to the ship does
not end the right of stoppage.
iv. Section 45(6) SGA provides that where the carrier or other bailee wrongfully refuses to
deliver the goods to the buyer or his agent in that behalf, a transit is deemed to be at an end.

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Question 8

Examine the implication of sections 34 and 35 of the Sale of Goods Act.

Answer

Sections 34 and 35 of the Sale of Goods Act are concerned with the buyer‟s rights of
examination and acceptance of goods. These are discussed below

Buyer’s right of examination

Section 34(1) SGA provides that where goods are delivered to the buyer which he had not
previously examined, he is not deemed to have accepted unless and until he has had a reasonable
opportunity of examining them for the purpose of ascertaining whether they are in conformity with
the contract.

Subsection 2 of the above section provides that unless otherwise agreed, when the seller tenders
delivery of goods to the buyer, he is bound, on request, to afford the buyer a reasonable opportunity
of examining the goods for the purpose of ascertaining whether they are in conformity with the
contract

Acceptance

Section 35 SGA provides that the buyer is deemed to have accepted the goods when he
intimates to the seller that he has accepted them, or when the good have been delivered to him and he
does any act in relation to them which is inconsistent with the ownership of the seller‟s, or when after
the lapse of a reasonable time he retains the goods without intimating the seller that he rejected them.

It is instructive to mention that section 34 SGA must be read side by side with section 35 SGA
and the question whether a buyer is deemed to have accepted the goods by either intimating
acceptance or doing something to the goods inconsistence with the seller‟s ownership before he has
reasonable opportunity to inspect them was answered in the case of Hardy & Co. v. Hillerns &
Fowler (1923) 2 K.B. 490. In that case, in a C.I.F. contract, a buyer bought wheat from the seller and
the wheat was to be shipped from Argentina to United Kingdom. The wheat reached the seller on
March 21st of that year. On the same day, buyer re-sold and delivered to a sub-purchaser a portion of
the wheat so delivered to them. Two days later, buyer discovered that the wheat did not conform with
the contract and he purported to reject delivery. It was found that at the time he purported to reject
delivery, a reasonable time had not elapsed. It was however held that the sale and delivery to the sub-
purchaser was an act inconsistent with the ownership of the seller and accordingly, buyer had
accepted the wheat within the meaning of section 35 SGA and could no longer reject sale.

The same decision was reached in the case of Reuben v. Faire Brothers & Co. Ltd (1949) 1
K.B. 254. In that case, the seller sold rubber materials to buyer who resold to a sub-buyer. The buyer
had asked the seller to deliver directly to the sub-buyer and this was done. The sub-buyer rejected the
goods for breach of condition and the buyer who had had no reasonable opportunity of examining the
delivery, sought immediately to do so. It was held as follows:

1. The place of examination and delivery was the seller‟s place of business,
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2. When the buyer instructed the seller to deliver to the sub-buyer, the buyer had constructively
taken delivery from the seller,
3. When the seller delivered the goods to the sub-buyer, he did so as agent, and buyer had done
an act inconsistent with the ownership of the seller, and
4. Under section 35 SGA, the buyer did not reject delivery.

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Question 9

Account for the place of examination and acceptance under the Sale of Goods Act.

Answer

Section 34(1) SGA gives the buyer the right to examine the goods sent to him by the seller. This
section provides that where goods are delivered to the buyer which he had not previously examined,
he is not deemed to have accepted unless and until he has had a reasonable opportunity of examining
them for the purpose of ascertaining whether they are in conformity with the contract.

Subsection 2 of the above section provides that unless otherwise agreed, when the seller tenders
delivery of goods to the buyer, he is bound, on request, to afford the buyer a reasonable opportunity
of examining the goods for the purpose of ascertaining whether they are in conformity with the
contract

By the provisions of section 35 SGA, the buyer is deemed to have accepted the goods when he
intimates to the seller that he has accepted them, or when the good have been delivered to him and he
does any act in relation to them which is inconsistent with the ownership of the seller‟s, or when after
the lapse of a reasonable time he retains the goods without intimating the seller that he rejected them.

The question whether a buyer is deemed to have accepted the goods by either intimating
acceptance or doing something to the goods inconsistence with the seller‟s ownership before he has
reasonable opportunity to inspect them was answered in the case of Hardy & Co. v. Hillerns &
Fowler (1923) 2 K.B. 490. In that case, in a C.I.F. contract, a buyer bought wheat from the seller and
the wheat was to be shipped from Argentina to United Kingdom. The wheat reached the seller on
March 21st of that year. On the same day, buyer re-sold and delivered to a sub-purchaser a portion of
the wheat so delivered to them. Two days later, buyer discovered that the wheat did not conform with
the contract and he purported to reject delivery. It was found that at the time he purported to reject
delivery, a reasonable time had not elapsed. It was however held that the sale and delivery to the sub-
purchaser was an act inconsistent with the ownership of the seller and accordingly, buyer had
accepted the wheat within the meaning of section 35 SGA and could no longer reject sale.

The same decision was reached in the case of Reuben v. Faire Brothers & Co. Ltd (1949) 1
K.B. 254. In that case, the seller sold rubber materials to buyer who resold to a sub-buyer. The buyer
had asked the seller to deliver directly to the sub-buyer and this was done. The sub-buyer rejected the
goods for breach of condition and the buyer who had had no reasonable opportunity of examining the
delivery, sought immediately to do so. It was held as follows:

5. The placer of examination and delivery was the seller‟s place of business,
6. When the buyer instructed the seller to deliver to the sub-buyer, the buyer had constructively
taken delivery from the seller,
7. When the seller delivered the goods to the sub-buyer, he did so as agent, and buyer had done
an act inconsistent with the ownership of the seller, and
8. Under section 35 SGA, the buyer did not reject delivery.

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The general rule is that the buyer is entitled to the delivery of all the goods at the same time.
See section 30 SGA provides that where the seller delivers to the buyer a quantity of goods less than
he contracted to sell, the buyer may reject them, but if the buyer accepts the goods so delivered, he
must pay for them at the contract rate. By the provision of subsection (2) of the section, where the
seller delivers to the buyer a quantity of goods larger than he contracted to sell, the buyer may accept
the goods included in the contract and reject the rest, or he may reject the whole. If he accepts the
whole of the goods so delivered, he must pay for them at the contract rate. Subsection (3) of section
30 provides that where the seller delivers to the buyer of the goods he contracted to sell mixed with
goods of different description not included in the contract, the buyer may accept the goods which are
in accordance with the contract and reject the rest, or he may reject the whole. The above are
however subject to any usage of trade, special agreement, of course of dealing between the parties.

It is apposite to mention that the seller cannot excuse the short delivery on the ground that he
would deliver the remainder in due course. Section 31(1) SGA has this to say “Unless otherwise
agreed, the buyer of goods is not bound to accept delivery thereof by instalments. Further, sub-
section (2) of that section provides that where there is a contract for the sale of goods to be delivered
by instalments, which are to be separately paid for, and the seller make a defective deliveries in
respect of one or more instalments, or the buyer neglects or refuses to take delivery of or pay for one
or more instalments, it is a question in each case depending on the terms of the contract and the
circumstances of the case, whether the breach of contract is a repudiation of the whole contract or
whether it is a severable breach giving rise to a claim for compensation but not to a right to treat the
whole contract as repudiated.

In Behrend & Co Ltd v. Produce Brokers Co Ltd (1920) 3 K.B. 530 where a seller agreed to
deliver a quantity of cottonseeds through the Port Inglis. The ship discharged a small part of the
cargo (goods) in London and then left to discharge the other goods at a place called „Hull‟. 14 days
later the ship returned to London and discharged the remainder of the cottonseeds which was the
subject of the sale. The court held that hat the buyer was entitled in accordance with the provision of
section 30(1) to either reject the whole consignment or retain the earlier quantity and reject the rest.

It is worthy of mention that the fact that the buyers are entitled to reject the whole of the goods
delivered in the circumstance therewith by section 30 SGA means that in substance the seller commits
a breach of condition by delivering the wrong quantity. In this respect the duties of the seller are
paralleled to those laid down as regards sale by description.

Indeed the whole of section 30 SGA is merely an application of the duty to deliver goods
conforming to the description posed by section 13 SGA. In both cases, the slightest deviation from
the terms of contract is a breach of condition entitling the buyer to reject the goods. Section 13 SGA
provides that “where there is a contract for the sale of goods by description, there is an implied
condition that the goods must correspond with the description, and if the sale be by sample, as well as
by description, it is not sufficient that the bulk of the goods corresponds with the sample, if the goods
do not also correspond with the description”.

Usually, this condition applies where the buyer has not seen the goods and relies on the seller‟s
description. Under this condition where goods are sold by description, it must answer to the

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description. This rule was illustrated in Varley v. Whipp (1900) 1 Q.B. 513, where a seller described
the machine he wanted to sell as new. The plaintiff who relied on the description bought the machine
without first examining it. The machine turned out not to be new. The plaintiff brought an action to
recover his purchase price and the court held that the plaintiff could rescind the contract and recover
his money.

Nevertheless, even where the purchase has seen the goods, if he still relies on the purchaser‟s
description to buy, the condition will still apply. This usually happens where the description of the
goods requires technical knowledge, or where the material facts relevant to the description are
peculiarly within the knowledge of the seller. This condition was judicially affirmed in Beale v.
Taylor [1967] 1 W.L.R. 1193 where a car sold by the defendant to the plaintiff which was described
as a 1961 Triumph Herald turned out be the front of a 1948 Triumph Herald, welded to the rear of a
1961 model. Although the plaintiff saw the car before the sale, he was allowed to rescind for a breach
of condition.

The de minimis rule

If the seller delivers goods which fail by a slight margin to conform to the description or if he
delivers in fraction too much or too little, the buyer may reject the whole of the delivery. The
qualification of this is that if the deviations are microscopic or negligible, the seller may be able to
plead the de minimis rule. But the de minimis rule has a limited scope and is somewhat random or
ambivalent in its application. In Margaronis Navigation Agency Ltd v. Henry W. Peabody & Co.
(1965) 1 Q.B. 30, there was a deficiency of .09 per cent (12500 tons of the quantity to be delivered
12588 tons plus 400 weights instead of 12600 tons) in a cargo of maize. The court held that the rule
is of general application, and the question which it raises was whether the departure from the precise
terms of the contract was so trivial as to be negligible, having regard to all the circumstances of the
case. It therefore concluded that it was not and cannot be regarded as within the de minimis rule.
Therefore the rejection of delivery by the buyer was upheld by the court.

In Wilensco Slaaki Towarzstwo Drevno v. Fenwick & Co Ltd (1938) 3 All E.R. 429, the seller
sold timber of specified measure to the buyer. There were certain permitted but slighted defined
variation from these specifications. Slightly less than 1 per cent of the timber failed to comply with
the contract requirement. The buyers were held entitled to reject the delivery.

In Polak & Zoon Naamlaze Venootschap v. George Cohen Nig Ltd (1969) NCLR 433, the
respondents contracted to sell to the appellants, “3,500 tons 10% more or less at buyer‟s option” of
heavy melting steel scrap of a defined specification. The appellants then requested the respondents to
inform them whether they could supply 4,000 or 3,850 tons and the respondents agreed to supply
3,850 tons (i.e. 10% over 3,500). But they eventually supplied 3,586 tons. The Supreme Court held
that where a contract for the supply of goods states the quantity followed by a given percentage,
“more or less” the supplier is not bound to deliver the exact quantity, but within the given percentage
of it, whether more or less, so that the delivery of the least quantity within the percentage is good
performance, but if the variance so allowed is expressed to be “at buyer‟s option” and the buyer
validly exercise his option, the supplier is bound to deliver the quantity so demanded by the buyer up
to and including the maximum within the percentage.

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Conversely, the de minimis rule was held to apply in the case of Shipton Anderson Co Ltd v.
Weil Brothers & Co Ltd (1912) 1 Q.B. 576. In that case, the seller contracted to sell to the buyer 4500
tons of wheat or 10 per cent more or less. The seller delivered 4950 tons plus 55 pounds (55 Ib) that
is, 55% more than the maximum quantity of 4,950 tons allowed under the contract but did not claim
the price of the excess. The court examined and saw that the quantity in excess was too slight
(trifling) a deviation and the seller had not claimed the price thereof. The sellers had substantially
performed the contract, and the buyers were not entitled to reject the cargo. The court invariably
affirmed the de minimis rule.

In the first two earlier cases, the rule did not avail the defendants. Here it was held that the
buyers were not entitled to reject the goods. The excess over the stipulated amount supplied being a
little over 1 pound (1 Ib) in every 100 tons. The case clearly called for the application of the de
minimis non curat lex rule. The position of the court is not less so in the case of Fenwick’s case
where the seller sold timber of specified measure to the buyer. There were certain permitted but
slighted defined variation from these specifications. Slightly less than 1 per cent of the timber failed
to comply with the contract requirement. The buyers were held entitled to reject the delivery.

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Question 10

In February this year, XYZ Company Ltd parted with goods worth 8 million dollars ($8
million) to a carrier for onward transmission to Dan Enterprises in Delta State. Ten days later,
the court declared Dan Enterprises insolvent, and this was given effective publicity by both
local and international media. XYZ Company Ltd is disappointed and sought immediately to
regain possession of the said goods. In the interim at Koko Port the master in charge of the
carrier acknowledged to the agent of Dan Enterprises that the goods have arrived and that they
belong to the buyer. The master of the ship then took off to off-load larger part of the goods at
Lagos Port, but on his way, he was intercepted by the agent of XYZ Company Ltd who
recovered the goods and promptly sold the goods at Lagos Port. What are the legal issues
involved in this matter

Answer

The issue for determination in this hypothetical case is whether XYZ Company Ltd
right of stoppage in transitu extends to right to intercept and re-sold goods already
acknowledged by an agent of the buyer.

The law is to the effect that transit is at an end if after the arrival of the goods at the
appointed destination, the carrier or other bailee or custodian acknowledges to the buyer or his
agent that he holds the goods on his behalf and then continues in possession of them as bailee
or custodian for the buyer or his agent, and it is immaterial that a further destination of the
goods may have been indicated by the buyer. This rule is statutorily provided for under
Section 45(3) SGA and received judicial affirmation in the case of Reddall v. Union Castle
Mail Steamship Co. Ltd (1914) 84 LJKB 360.

Section 44 SGA gives the unpaid seller who has parted with the possession of the goods
the right of stoppage in transitu when the buyer of goods becomes insolvent, the unpaid seller
who has parted with the possession of the goods has the right of stopping them in transitu so
long as the buyer or his agent has not taken possession. This right of stoppage in transitu only
remains operational in so far as the buyer has not taken possession. On the conditions to be
satisfied before an unpaid seller can exercise his right of stoppage in transitu is that the goods
must be in the course of transit.

Goods are deemed to be in the course of transit from the time they are delivered to a carrier by
land, by sea, by rail or other bailee or custodian for the purpose of transmission to the buyer until the
buyer or his agent in that behalf takes delivery of them from such carrier or other bailee or custodian.
Goods are in transit when they have passed out of the possession of the seller into the possession of
the carrier but have not yet reached the buyer or his agent. Section 45(1) SGA provides inter alia that
until the buyer or his agent in that behalf takes delivery of the goods on transit from the carrier or
custodian or bailee, the goods are deemed to be on transit. In effect, the transit ends as soon as the
buyer or his agent in that behalf takes delivery of the goods. Section 45(2) SGA gives a clear scenario
as to when a transit is said to be at an end. Thus, it provides that if the buyer or his agent in that
behalf obtains delivery of the goods before their arrival at the appointed destination, the transit is at
an end. This provision was given judicial interpretation in the case of Reddall v. Union Castle Mail

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Steamship Co. Ltd (1914) 84 LJKB 360 where the buyer intercepted the goods at the end of one stage
in their transit and the goods were still in the custody of a carrier, it was held that transit had ended.

From the hypothetical scenario given above, the provision of section Section 45(2) SGA has
been satisfied by Dan Enterprises when at Koko Port the master in charge of the carrier
acknowledged to the agent of Dan Enterprises that the goods have arrived and that they belong to the
buyer. The transit was at an end at that stage. It is immaterial that the master of the ship then took off
to off-load larger part of the goods at Lagos Port. In effect, the act of the agent of XYZ Company Ltd
intercepting and promptly selling the goods at Lagos Port is illegal and a breach of the provision of
section 45(2) SGA.

On the authorities of section 45(3) SGA and the decision of the court in s Reddall v. Union
Castle Mail Steamship Co. Ltd supra, it is safe to conclude that the interception and the subsequent
selling of same is a breach of the right of ownership of the buyer

Goodluck from Cmr. Wisdom

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