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SS2: COMMERCE - 2ND TERM

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  1. Marine Insurance | Week 1
    3 Topics
  2. Non-insurable Risks | Week 2
    4 Topics
  3. Banking - Central Bank of Nigeria | Week 3
    3 Topics
    |
    2 Quizzes
  4. Types of Account | Week 4
    4 Topics
    |
    2 Quizzes
  5. Warehousing | Week 5
    1 Topic
    |
    1 Quiz
  6. Capital | Week 6
    2 Topics
    |
    1 Quiz
  7. Credit | Week 7
    3 Topics
    |
    3 Quizzes
  8. Profit | Week 8
    2 Topics
  9. Turnover | Week 9
    3 Topics
    |
    2 Quizzes
  10. Business Law | Week 10
    8 Topics



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The sale of goods Act 1893 defines a contract of sale of goods as a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a money consideration called the price. Apart from the usual elements of a valid contract, two additional elements-goods and money consideration (price) must be present in a contract of sale of goods. A contract of sale of goods includes both a sale and an agreement to sell.

Features of Contract of Sales

1. There must be an agreement to transfer property in goods.

2. The property may be transferred immediately or it may be agreed to be transferred later.

3. There must be a buyer and a seller.

4. There is money consideration called the price.

Formalities 

A contract of sale may be made orally, or may be implied from the conduct of the two parties. It can also be in writing or partly in writing with or without a seal.

Elements of a Valid Contract of Sale

The sale of goods Act specifies that two important elements must exist in a contract of sale; namely: 

1. Goods

2. The price (monetary consideration)

Differences between Sales and Agreement to Sell

SalesAgreement to Sell
1It is an executed contract operating as actual transfer of ownership.
It is executor contract with ownership being transferred to a later date claim
2Sellers can sue buyers for priceSellers can only sue for unliquidated damages for breach of contract.
3Sellers default, buyers can sue for damages and delivery.Upon default by the sellers, Buyers can only sue for damages
4Ownership and risk pass to the buyers at the point of saleOwnership does not pass to the buyer, therefore risk of loss remains with the sellers

Types of Contract of Sales

Some terms and concepts used when quoting for goods and accepting the quotation were given terms and concepts include CIF,COD, Ex-ship, FOB, etc these terms have legal implications and represent different types of contract of sale.

Therefore, types of sale of goods contracts include the following:

1. Open Contracts without Restrictions Terms: where no express restricting terms are used on the quotation, invoice, etc or where terms such as “Cge pd” (carriage paid) are specified in the contract, delivery of goods to a carrier is deemed by the sale of goods Act as delivery to the buyer.

2. C.I.F Contracts: C.I.F means costs, insurance, and freight. This means that the price paid by the buyer included the cost of the goods as well as insurance and the cost of carriage of the goods.

3. COD Contracts: COD means cash on delivery. This means that the buyer must pay cash at the point of delivery in exchange for the goods.

4. Ex-ship Contract: according to the sale of goods Act, ex-ship means that the seller has to cause the delivery to be made to the buyer from a ship which has arrived at a port of delivery and has reached a place therein, which is usual for the delivery of goods of that kind in question.

The legal implication of ex-ship terms of sale are as follows: 

1. The cost of the goods includes insurance and freight.

2. Ownership and title to the goods remains with the seller until the buyer takes delivery of goods.

3. The buyer will take delivery of the goods from the ship at the port or destination and will, therefore, be responsible for paying warehousing and customs duties.

4. If the goods are damaged on transit or lost, the seller takes responsibility for the loss.

FOB Contracts: FOB means free on board. It means that the seller undertakes to place the goods on the ship chosen by the buyer who pays the freight and cost of insurance.

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