SALES
202. Sale Defined. A transfer of title of personal property is termed a sale. By title is meant ownership. Mere possession of personal property does not constitute ownership, neither does right to possession constitute ownership. One may lease personal property, and by means of the lease have the right to possession, while the title or ownership is in another. One may find or borrow personal property, obtaining possession while the title or ownership remains in another. The transfer of the title or ownership of personal property as distinguished from the transfer of mere possession or the right of possession, constitutes the subject of Sales. A sale may be defined to be a contract by which the title to personal property is transferred for a consideration in money, or money's worth. This transfer of title to personal property may be entirely independent of the transfer of possession. One may make a sale of personal property by which the purchaser takes the title while the possession remains in the seller, or in some third person.
When, and under what circumstances the title passes is an important question. A sale of personal property ordinarily gives the purchaser the right to immediate possession of the property. The time the title actually passes to the purchaser does not depend upon the time the property is delivered to the purchaser, but upon the intention of the parties to the contract of sale. A sale is a contract requiring all the elements of a simple contract. There must be a meeting of the minds of the contracting parties, a valuable consideration, competency of parties, etc. (See Elements of a Contract, chapter on Contracts.)
203. Sale Distinguished from a Contract to Sell. A sale is a contract by which the title passes to the purchaser at the time the sale is made. A contract to sell is a contract by which the title passes to the purchaser at a future time. A sale is a present transfer of title or ownership to personal property. A contract to sell is an agreement to pass the title or ownership to personal property to another at a future time. The practical distinction is in determining upon whom the loss falls in case the goods are destroyed or injured by fire, or other accident. In case of a sale, title or ownership passes to the purchaser, even though possession remains in the seller. If the goods are lost by fire, without fault of the seller, the purchaser bears the loss. In case of a contract to sell, the title or ownership does not pass to the purchaser until the time for fulfilling the contract has arrived, and until the conditions of the contract are fulfilled. If the goods are lost before the contract is carried out, the loss falls on the seller. For example, A, a farmer, sells ten barrels of apples to B. B examines the apples, selects the ten barrels, pays A the stipulated price, and says he will call for them the following day. Before B calls, the apples are destroyed by fire, without fault of A. B must stand the loss. The title or ownership passed to him when the sale was made. If B calls on A and enters into a contract by the terms of which A agrees to deliver at B's residence ten barrels of apples the following day, at an agreed price, and the apples are destroyed by fire before A delivers them, the loss falls on A. This is a contract to make a sale, not a sale. Title to the apples does not pass to B until they are delivered by A, according to the terms of the agreement.
Parties may agree that title may pass at a certain time, or upon the performance of a certain condition. In this event, title does not pass until the time mentioned arrives, or the condition is fulfilled. In the majority of sales of personal property, the parties do not set forth the terms and conditions fully. In the absence of an express agreement or custom to the contrary, parties are presumed to intend the title or ownership to pass to the purchaser at the time the sale is made.
204. Sale Distinguished from Barter. A sale is an agreement to transfer the title of personal property for a consideration in money, or for something measured by a money standard. An agreement to exchange goods, or an exchange of goods, is a barter, and not a sale. The distinction is technical, but serves some useful purposes. If A, for a consideration of $200.00, purchases a car of cabbage from B in Nashville, to be delivered in Cleveland, June 20th, and the car does not arrive, A may go into the nearest market, and purchase a car of cabbage of the same quality, and collect the difference between the market price and contract price from B. If A is obliged to pay $250.00 for the cabbages, he can collect $50.00 from B. If, on the other hand, A agrees to give B a horse for a car of cabbages, no price having been fixed on the horse or on the cabbages, and B fails, and refuses to carry out the contract, A must sue B on the contract, and collect as damages such amounts as he is able to show he lost by reason of B's failure to carry out the contract.
Salesmen are commonly employed to sell goods. This means to sell for money, and unless they are expressly authorized to barter or exchange goods, attempted exchanges are without authority, and do not bind their principal.
205. Conditional Sales. The term, conditional sale, has come to have a technical meaning. Articles of merchandise, such as sewing machines, cream separators and cash registers are commonly sold under a special contract, by which possession is given the purchaser, and the title by express agreement remains in the seller until the entire purchase price is paid. The purpose of this form of contract is to obtain security for the purchase price of the article sold. In the absence of statutory regulations, if the purchaser does not pay the purchase price at the agreed time, the seller may take possession of the property. It is the custom of sellers using this form of contract to require the purchaser to sign a contract stipulating that the purchase price be represented by promissory notes of the purchaser, payable in installments, and that the title is to remain in the seller until the entire purchase price is paid. If the purchaser defaults in any one of his installments, by the terms of the contract all the remaining installments at once become due. This form of contract worked many hardships. Purchasers were required to make a substantial payment in advance. If they succeeded in paying practically all the installments, but defaulted in one, the seller could take possession of the property, causing the purchaser to lose all he had paid. This form of contract proved so unconscionable in some of its workings that the legislatures of most states have passed statutes requiring conditional sale contracts to be filed with a public official to be enforceable, and do not permit the seller to take possession of property without repaying the purchaser the amount already paid less the actual damage the property has sustained. This damage usually cannot exceed 50% of the original selling price of the property.
206. Sale Distinguished from a Bailment. Possession of personal property is frequently given another, for the purpose of having work performed on it, to be used by another, to secure a debt, or to be protected or preserved without transfer of title. Such a transaction is called a bailment. It is discussed more at length under a separate chapter. A bailment does not constitute a sale, in that there is no transfer of title, or ownership of the personal property, possession of which is given to another. For example, A hires the use of a horse and carriage from B, a liveryman, for two days. A secures possession of the horse and carriage. He has the right to retain possession of them for two days, and has the right to use them for the purpose hired. He cannot sell them, however, nor can he do anything inconsistent with B's ownership. This transaction is a bailment.
207. What May Be the Subject of a Sale. Any article of personal property having a present existence may be sold. It matters not, whether it is a chose in possession, or chose in action. By chose in possession is meant a tangible piece of personal property as distinguished from a mere right. A horse, plow, chair or desk is an example of a chose in possession. A promissory note, a contract or mortgage is an example of chose in action. Either may be the subject of a sale. The distinction between a sale or present transfer of title to personal property, and a contract to make a sale, must be borne in mind. If A sells his horse to B for $100.00, in the absence of any agreement as to delivery the title to the horse passes to B as soon as the contract is made. This transaction is a sale. If A promises to sell his horse to B the second of next month, if B will agree to pay him $100.00 when the horse is delivered the second of next month, and B so agrees, the contract is not a sale, but a contract to make a sale. Articles of personal property, to be made or manufactured, are not the subject of a sale.
Business men commonly make contracts to sell goods in the future which they do not have in stock, but expect to manufacture, or purchase elsewhere. Such contracts are not sales. The title to the goods does not, and cannot pass to the purchaser when the contract is made. They are mere agreements to make sales in the future. They are treated the same as ordinary contracts, not as present sales. If the goods are destroyed before they are completely manufactured, the seller stands the loss, since the title has not passed from him. If a person agrees to sell in the future goods to be manufactured, and fails to deliver the goods specified in the contract, the buyer has the usual remedy. He may purchase the goods in the market nearest the place of delivery at the time of delivery, and sue the seller for the difference between the contract price and the market price. The buyer is not obliged actually to purchase the goods to enable him to bring suit against the seller. He may bring a suit against the seller for the difference between the price he contracted to pay for the goods and the market price at the time and place of delivery. Crops to be grown are not the subject of present sale. Crops planted, but not matured, may be sold. Title to the crops at the present stage of their existence passes to the buyer.
208. Statute of Frauds, or Contracts of Sale Which Must Be in Writing. One section of the English Statute of Frauds applied to sales. This statute was passed in England about 1676. The seventeenth section, which applies to sales of personal property, is as follows:
And be it further enacted by aforesaid authority, that from and after the four and twentieth day of June, no contract for the sale of any goods, wares or merchandise for the price of ten pounds sterling, or upwards, shall be allowed to be good except the buyer shall accept part of the goods so sold, and actually receive the same, or give something in earnest to bind the bargain, or in part payment, or that some note or memorandum in writing of said bargain be made, and signed by the parties to be charged by such contract, or their agent thereunto lawfully authorized.
The states, generally, have a statute modelled after this section of the English statute, and providing that contracts for the sale of personal property, the price of which exceeds fifty dollars, shall not be enforceable unless a memorandum of the contract be made and signed, except there be a delivery of at least a part of the property, or except something be paid by the purchaser to bind the bargain. Some of the states have no statute of frauds containing a provision relating to the price of the goods. In many of the states, the valuation fixed by statute exceeds fifty dollars. Where the statute exists, contracts which are not in writing are not void. They are merely voidable. The parties may voluntarily carry them out if they so choose. The law does not prohibit them, but if one party refuses to recognize the contract, the other party cannot enforce it by an action at law. A portion of the fourth section of the English Statute of Frauds provides that contracts, by their terms not to be performed within one year from the time of the making thereof, must be in writing to be enforceable. The states, generally, have a similar statutory provision. This statute applies to sale of personalty as well as to real estate. If the contract can be performed within one year, it is not within the provisions of the statute.
209. Delivery of Personal Property Sold. In the absence of any express agreement to the contrary, there is an implied agreement, on the part of the seller, to deliver personal property sold, when the purchaser pays the price. By delivery is meant placing the personal property at the disposal of the purchaser. It must be borne in mind that in a contract of sale of personal property, title or ownership passes to the purchaser at the time the sale is made, even though possession remains in the seller. This gives the seller the right to obtain possession of the goods upon paying the price. If the goods are destroyed without fault of the seller after the sale, and before delivery, the loss falls on the buyer. If A offers to sell B his wagon for $100.00, and B accepts, nothing being said about delivery, the title to the wagon passes at once to B. If it is destroyed without fault of A, the loss falls on B, even though B has not paid the price or received possession of the wagon. B is entitled to possession of the wagon when he pays A $100.00. A is not obliged to give B possession of the wagon, even though B is the owner of it, until he receives the price, $100.00.
In the above example there is no stipulation about delivery. The parties make a sale, agreeing upon the price and thing to be sold, nothing being said about the delivery. The law in such cases impliedly requires the seller to deliver when the price is paid, and not until then. In many contracts, however, the time, place, and manner of delivery are stipulated in the contract. Sometimes usage and custom supply these things when the parties do not expressly so stipulate. When a time, place, or manner of delivery by the seller is stipulated in a contract, either by express agreement, or by usage and custom, title to the property usually does not pass to the buyer until the time has elapsed, and until the seller has delivered according to the manner stipulated, or has tendered delivery.
A stipulation in a contract of sale that the seller shall deliver at a particular time or place, or in a particular manner is deemed to show an intention on the part of the parties that title shall not pass until the seller has so delivered. If the seller refuses to accept the goods or pay the price, an offer to deliver by the seller is equivalent to a delivery. The seller, on the other hand, is not obliged to give up possession of the goods until he receives the agreed price. If the seller agrees to give the buyer credit, this rule is not applicable. If no time of delivery is mentioned, delivery must be made within a reasonable time, depending upon the circumstances connected with the particular contract. When delivery is to be made in installments, failure to pay for one installment ordinarily entitles the seller to refuse to deliver the balance, or if the seller refuses, or fails to deliver the first installment, the buyer may refuse to accept subsequent installments. The buyer is not obliged to accept anything except the article ordered. If more or less is tendered him, he is not bound to accept. If he accepts more or less, he is bound to pay the reasonable value of the same. If no place of delivery is mentioned, the presumption is that delivery is to be made at the place where the property is located at the time the sale is made.
The mere fact that delivery is to be made in the future does not prevent title from passing at the time the sale is made. There must be something in addition to the fact of future delivery to delay the passing of the title until the time of delivery. If A purchases an automobile from B, making the selection, delivery to be made the following Thursday, title passes at once to A. If the automobile is destroyed by fire, or injured without B's fault, the loss falls on A. If, however, B is to do anything with the property, or is himself to make delivery, this shows an intention on the part of the parties that title is not to pass until delivery is made.
210. When Title Passes. The question of when title to personal property, the subject of a sale, passes to the purchaser is important in determining upon whom the loss falls, if the property is destroyed, stolen, lost or levied upon by judgment of attaching creditors. Title or ownership to property sold does not depend upon possession. Personal property may be sold, and title or ownership may pass to the purchaser, while the seller still has possession, as well as the right to possession. The general rule is that title or ownership of personal property sold passes to the purchaser at the time the parties to the sale intend it to pass. If their intention is expressed, it governs, and the question is settled. In the great majority of sales, however, the parties do not expressly determine when title shall pass and this must be presumed from the circumstances.
For example, if A offers B $20.00 for a certain harness which is selected, and A accepts the offer, nothing being said about the delivery or payment, or when title or ownership shall pass to A, the law presumes it to be the intention of the parties that title shall pass when B accepts A's offer—and from that time, the harness belongs to A. B, however, has the right to retain possession of the harness until A pays him the purchase price of $20.00. When A offers B the $20.00 at the place where the harness was located when the sale was made, B must give A possession. B is not obliged to deliver at any other place. If, however, A offers B $20.00 for B's harness, which is determined upon and selected, B to deliver same at A's place of business the following evening, this shows an intention on the part of the parties that the title is not to pass to A until B delivers the property to A the following evening. A tender or offer by B to deliver the property to A the following evening, passes title and places the property at A's risk. If, however, delivery is to be made merely in the future, not requiring the seller to take the property to any particular place, the fact that delivery is to be made in the future does not prevent title passing to the purchaser at once.
If A purchases B's harness for $20.00, the harness having been selected, delivery to be made in five days, title passes at once to A.
COOK COUNTY BUILDING, CHICAGO, ILL.
Holabird & Roche, Architects, Chicago, Ill.
Building Completed in 1907. Cost, $5,000,000. Length, 380 ft.; Width, 160 ft.; Height, 204 ft. Eleven Stories, with Sub-Basement Connecting with Tunnel System and Electric Railroad Service Underlying Business Portions of City. Walls, Gray Vermont Granite; Spandrel Sections, Green Terra-Cotta. The Corinthian Columns on the Exterior are 94 ft. Long and 9 ft. in Diameter. General Interior Plan is that of Letter E. Building Contains its Own Electric-Light and Steam-Heating Plants. City Hall, Shown at Left, is Practically a Duplicate of the Old County Building Replaced by this New Structure, and will Itself be Replaced by a Similar Building. Photographed June, 1907, 17 Months after Excavation was Started.
A is obliged to offer B $20.00 at the expiration of five days, and B must give possession to A. If the article sold is to be prepared for delivery, or any work is to be performed on it by the seller before delivery, title does not pass until this work has been completed. If the goods are to be weighed or measured to determine the quantity or price, title does not pass to the purchaser until this has been done. Probably, if the goods are determined upon, and the entire mass is sold and delivered to the seller who is to weigh or measure it to determine the quantity only, the title passes upon delivery.
If the contract, sale provides that goods are to be delivered to a carrier, delivery to the carrier passes title to the purchaser. Delivery to the carrier must be made so as to protect the interests and rights of the purchaser. The goods must be properly packed, and the proper kind of a bill of lading taken.
If goods are sold upon approval, or upon trial, they must be approved or tried before title passes.
If a portion of goods in mass or bulk is sold and the mass or bulk contains different qualities, the portion purchased must be separated and selected before the title passes. If a portion of goods in bulk is purchased, the bulk being of the same quality, separation of the portion sold is sufficient to pass title. Some courts even hold that separation is not necessary to pass title, if the bulk is of the same quality. Title to goods to be manufactured does not pass until the goods are manufactured and tendered.
211. When Payment of Price Must Be Made. Parties to a contract of sale may expressly agree upon a time of payment of the article sold. In this event, the time agreed upon prevails. In the absence of an agreed time of payment, the law presumes that payment is to be made at the time and place of delivery. The seller may retain possession of goods sold, until he receives payment of the agreed price, even though title has passed to the purchaser. If the sale is made on credit, the purchaser cannot be required to pay until the time for which he was to be given credit has expired. In the absence of an agreed time for payment, payment must be made at the time of delivery of the goods.
If the seller reserves any control over the goods, title remains in him. For example, if he is to ship the goods to another, and if he takes the bill of lading in his own name instead of the name of the purchaser, title remains in the seller.
212. Effect of Fraud Upon a Contract of Sale. Fraud has been defined by a prominent author to be "A false representation of facts, made with a knowledge of its falsehood, or recklessly, without belief in its truth, with the intention that it should be acted upon by the complaining party, and actually inducing him to act upon it." If a party innocently makes a representation, even though it proves to be false, the representation is not fraudulent unless the party making the representation should have known, or could easily have discovered, its falsity.
If A endeavors to buy goods from B, and tells B that he is worth $5,000.00, when in fact he is worth nothing, and B relying upon A's statement, sells the goods to A, B is entitled to rescind the contract by reason of the fraud. He may sue and recover the price of the goods, or he may retake the goods from the buyer. (See Rescission under chapter on Contracts.) If the goods have been sold to a third party who purchases for value and without notice of the fraud, the original seller cannot take the goods from him. A sale procured through fraud is voidable, and not void. The seller may avoid the sale if he chooses. That is, title vests in the purchaser subject to being retaken by the seller, if he chooses, when he discovers the fraud. If a third person innocently purchases the goods before the original seller rescinds the contract, the last purchaser's title cannot be disturbed. The seller may permit the purchaser to keep the goods, and bring an action for damages based upon deceit.
One kind of a sale frequently induced by fraud is void, absolutely, and not voidable. If a person fraudulently induces another to believe that the purchaser is someone else, and purchases goods under this representation, no title passes from the seller, and he may recover the goods from an innocent purchaser.
213. Rule of Caveat Emptor, or Let the Purchaser Beware. One who purchases chattel property from anyone except the grower or manufacturer of the article in question, which is inspected by the purchaser, or may be inspected by the purchaser, purchases at his own risk. If the article turns out to be of poor quality or worthless, in the absence of fraud or warranty, the purchaser has no redress. This rule is called the rule of Caveat Emptor, (let the purchaser beware). Its purpose is to decrease litigation, and make men rely upon their own judgment. If a purchaser is unwilling to rely upon his own judgment, he must exact a warranty from the seller. In the absence of warranty or fraud, the purchaser must abide by the result of his purchase. If the article purchased has defects apparent to anyone upon inspection, the purchaser cannot complain. He should have seen the defects. If the defects are not apparent upon inspection, he must bear the loss. He should have required the seller to warrant the goods against latent defects, if he was unwilling to purchase on his own judgment. In all sales by an owner, however, title to the goods is impliedly warranted, and in case of sale of goods grown or manufactured by the seller, there is an implied warranty against latent defects. In all other sales, the purchaser buys at his own risk, and has no redress against the seller unless the latter warrants the goods. Warranties are discussed in the following section.
214. Express Warranty. Contracts of sale often contain collateral agreements called warranties. Warranties are either express or implied. An express warranty is an agreement in addition to the ordinary agreement to transfer a certain chattel for a consideration in money or money's worth, by which the seller agrees that the thing sold is of a certain quality, or is in a certain condition. An express warranty is not an essential part of a contract of sale. That is, a sale containing no collateral promise to the effect that certain conditions or terms of the contract are warranted, may be made. If the contract of sale does not expressly state that the seller warrants certain terms or conditions, or does not contain words of similar meaning, the contract of sale is without express warranty. An express warranty, by express agreement, adds something to the contract of sale. This additional agreement, called an express warranty, enables the purchaser to recover damages from the seller for failure of the warranty, when he might not be able to have any redress if the sale were made without warranty. Express warranties may be made orally, or in writing.
If the seller, in making the sale expressly states that he warrants certain terms of the contract, or uses language which means that he intends to warrant certain terms of the contract, there is an express warranty. A sells a wagon to B and warrants that it will carry 6,000 lbs. of stone. If it fails to carry this amount, B can recover from A on this warranty. If A had sold the wagon to B without this stipulation, and it had failed to carry 6,000 lbs. of stone, B would have no redress.
A seller is permitted to express his opinion relative to the quality of the article which is the subject of the sale without making a warranty. This is called "trade talk," or "puffing." A seller is permitted to express his own opinion relative to the quality of goods he is endeavoring to sell, without having his words amount to a warranty, but if he makes positive assertions, his words will be construed as a warranty. Such expressions as, This is first class, and This is equal to any on the market, are usually regarded as "trade talk" and not as warranties.
215. Implied Warranties. Some contracts of sale carry with them implied warranties. These warranties are common to all sales of the particular class in question. Implied warranties cannot be said to be in addition to the contract of sale, but are impliedly a part of the contract. The most common implied warranties are warranties of title, warranties of wholesomeness in sale of food, warranties in sales by sample, warranties of merchantability, and warranties of fitness of goods to be used for a particular purpose.
216. Implied Warranty of Title. In every sale, in the absence of an express stipulation to the contrary, there is an implied warranty of title. This means that the ownership is in the seller, and that he has the right to sell the property, and that it is free from incumbrances. This, of course, does not prevent the seller from disposing of just what interest he has in the property if he expressly so contracts. For example, if A negotiates the sale of a horse to B, and tells B that he has purchased the horse a few days previously from C, and does not know whether there are any incumbrances on the horse, but will sell what interest he has, and if B purchases on these representations, he cannot sue A on an implied warranty of title if it subsequently develops that D has a mortgage on the horse. If, however, A offers to sell B a horse, saying nothing about the matter of title, and B purchases the horse, and later is obliged to yield possession to C, who holds a mortgage, B may recover the purchase price of the horse from A upon an implied warranty.
Formerly, a distinction was drawn between sales of property in the possession of the seller, and of property in the possession of some third person, making the seller not liable upon an implied warranty in the latter case. At present, however, the tendency of the courts is to make the seller liable upon an implied warranty, regardless of whether the property is in his possession, or in the possession of a third person at the time the sale is made. When a person sells chattel property, not as owner, but in an official capacity, or as an agent, there is no implied warranty of title. Common examples of this principle are sales by a pledgee, mortgagee, sheriff, guardian, administrator, assignee, or trustee in bankruptcy.
217. Implied Warranty of Wholesomeness in Sales of Food. In the sale of articles to be used for food, there is an implied warranty that the article sold is wholesome and fit for the purpose which it is sold. This rule is based upon the principle of public policy, that it is the duty of the state to protect life and health. A, a grocer, sold canned tomatoes to B, for use in B's family. The tomatoes contained poisonous adulteration. A was held liable in damages to B, for breach of implied warranty of wholesomeness of the article sold for food. Some jurisdictions hold that this rule does not apply in sales of food, where the article is not sold to a consumer. That is, if the article is sold by a wholesaler to a jobber, or to a retailer, the warranty does not apply, but where it is sold by anyone to a consumer, it does apply.
218. Implied Warranty in Sales by Sample. When goods are not inspected by the buyer, but a sample is furnished him, from which he purchases, there is an implied warranty that the goods sold correspond with the sample. The fact that a sample of goods is exhibited by the seller and examined by a purchaser does not necessarily mean that a resulting sale is one by sample. The sample exhibited may not be claimed by the seller to represent in every respect the article to be furnished, or the purchaser may not desire to purchase according to the sample. To constitute a sale by sample, a sample must be exhibited by the seller upon a representation that it is a sample of the goods to be sold. If exhibited for any other purpose, the resulting sale will not be a sale by sample. The purchaser must make the purchase relying upon the sample, and with the understanding that the goods are to correspond with the sample. If the goods are present at the time the sale is made, and the purchaser inspects them, or has the opportunity to inspect them, in the absence of fraud, he cannot claim that the sale is by sample.
219. Implied Warranty of Merchantability. Where goods which have not been inspected or selected by the purchaser are ordered to be delivered in the future, there is an implied warranty that they are of average quality. This is called an implied warranty of merchantability. A ordered a "Buckeye" mowing machine of B, to be delivered the following week. B delivered a machine which would not cut grass. B was held liable to A upon an implied warranty of merchantability. If A had inspected the machine, and made the purchase upon his own selection, in the absence of fraud on the part of B, A would have no redress. But, in case the article is purchased without opportunity for inspection, to be manufactured or delivered in the future, there is an implied warranty that the article is an average one of its kind.
220. Implied Warranty of Fitness of Goods for the Purpose for Which They are to Be Used. When a purchaser makes known to a seller the purpose for which the article is to be used, and the seller is himself the manufacturer or grower of the article, there is an implied warranty that the article is fit for the purpose for which it is to be used. This applies only to articles to be manufactured or delivered in the future, and not to articles inspected and selected by the purchaser. If A goes to B, a manufacturer, and tells him he desires to have manufactured an instrument to hold liquid soap suitable for the use of workingmen in shops, and B agrees to manufacture and sell such an article, there is an implied warranty on B's part that the soap-holders will be suitable for the purpose for which they are to be used. If, however, A furnishes B plans for the manufacture of a liquid soap-holder, and orders a quantity, there is no implied warranty on B's part that the articles will be fit for the purpose intended. A in this case relied upon his own judgment. B's contract is fulfilled when he furnishes the article according to A's plans. The work must, of course, be done in a workmanlike manner, free from defects of material and workmanship. This implied warranty of fitness of an article for the purpose for which it is to be used, applies only where the purchaser reveals the purpose of the article to the grower or manufacturer who agrees to furnish such an article. It does not apply to articles furnished according to furnished plans, or to articles selected by the purchaser.
221. Remedies for Breach of Warranty. In case of breach of warranty, the purchaser may bring a suit for damages against the seller, or he may promptly return the goods, and recover the purchase price. The latter remedy is called rescission. In case of breach of an express warranty, in most jurisdictions the remedy is the same as for breach of implied warranty. In some states, however, the seller is not permitted to return the goods and sue for the purchase price, but is restricted to an action for damages.
222. Seller's Lien, Delivery to Carriers, and Stoppage in Transitu. In case of sales for cash, the seller has the right to retain possession of the goods until he receives payment of the purchase price. If the goods are sold on credit, or if the seller agrees to deliver at a certain place, the seller must comply with his contract. But if the purchaser becomes insolvent before the goods are delivered, the seller may retain possession until paid. He is not obliged to deliver goods on credit, even though such is his contract, if the purchaser subsequently becomes insolvent. The right of a seller to retain possession of goods until the purchase price is paid is called the seller's lien. This lien is lost by the seller's delivery of the goods to the purchaser. If the possession is obtained by fraud on the part of the purchaser, it is regarded as no possession, and the seller may still enforce his lien by retaking possession of the property.
Where goods are ordered by a person in one town from a person in another town, necessitating delivery by a carrier, in the absence of express stipulation to the contrary, title to the goods passes to the vendee upon delivery of same by the vendor to the carrier. If A, in Cleveland, orders a car of pine lumber from B, in Milwaukee, for $1,500.00, title to the lumber passes to A when B delivers the lumber to the transportation company in Milwaukee. If A orders the lumber delivered F. O. B. Cleveland, title does not pass to A until the lumber reaches Cleveland. If A orders the lumber, agreeing to pay $1,500.00 for the same, "freight allowed" to Cleveland, title passes to A when B delivers the lumber to the transportation company in Milwaukee, even though B must allow A to deduct the freight from the purchase price of $1,500.00. This question is important in determining upon whom the loss falls in case of damage of the goods while in the hands of the transportation company. The one who has the title at the time the loss occurs must stand the loss. Such party may recover from the transportation company. This question is discussed in the chapter on Carriers.
While a seller loses his lien by delivery of possession of the goods to the purchaser, if the goods are delivered to a carrier and the purchaser becomes insolvent before the carrier delivers the goods to him the seller may stop delivery of the goods, and retake possession even though title has passed to the purchaser. The seller's lien in this event revives. By insolvency is meant inability to pay one's debts. The right of a seller to stop a carrier from delivering goods to a vendee, in case of insolvency of the latter, is called stoppage in transitu. This question is also discussed in the chapter on Carriers.
A seller may enforce his lien by keeping the goods, and suing the purchaser for damages, or by selling the goods at private or public sale, with notice to the purchaser of the time and place of sale, and then by suing the original purchaser for the difference between the amount he receives for the goods on resale, and the amount the original purchaser agreed to pay. The seller may, of course, hold the goods and demand the original purchase price of the purchaser, and not yield possession until he receives the purchase price.
223. Remedies of Seller. The seller's lien described in the previous section is one of the remedies of a seller. If the purchaser refuses to accept the goods, the seller may keep or resell the goods, and if he receives less than the original purchaser agreed to pay, he may recover the difference as damages from the original purchaser. For example, A agreed to manufacture and deliver a specially constructed cash register for B for $500.00. When it was completed, B refused to accept same. A sold it for $200.00, the fair market price, and recovered from B, $300.00 as damages for B's breach of contract. If the purchaser accepts the goods and fails to pay for them when due, the seller may sue and recover the entire purchase price, together with damages and expenses which are necessarily connected therewith.
224. Remedies of Purchaser. Where title has not passed to the purchaser, if the seller refuses or fails to deliver goods according to the contract of sale, the purchaser may go into the market at the time and place of delivery and purchase goods, and if obliged to pay more than the original contract price, he may recover the excess from the seller. For example, suppose A purchases five hundred pounds of lard of B for $60.00, B agreeing to deliver the lard October 30th, at Chicago. If B fails to deliver the lard in Chicago, October 30th, A may purchase lard of the same quality in Chicago, and if he is obliged to pay $90.00 for the same, he may recover $30.00 damages from B. If there is no market at the place of delivery mentioned in the contract, the purchaser may purchase at the nearest market. If the purchaser makes the purchase for a particular purpose, which he makes known to the seller at the time the sale is made, and he is specially damaged by reason of the failure of the seller to keep his contract, special damages may be recovered for losses arising by reason of the special circumstances. If title to the goods has passed to the purchaser, in case the seller refuses to deliver them, the purchaser may bring an action of replevin to recover their possession. Replevin is a possessory action. (See chapter on Courts and Legal Remedies.)