The government class book / Designed for the instruction of youth in the principles of constitutional government and the rights and duties of citizens.

by Andrew W. Young

Chapter LV.

Contracts of Sale.

§1. A Sale is a transfer of the title to property to another person for a certain price; or the exchange of a commodity for its equivalent value in money. The exchange of one commodity for another, is barter. Unless the absolute title is conveyed, the contract is merely a mortgage. The same general principles of law which apply to contracts in general, are applicable to contracts of sale, viz.: the competency of the parties to contract; the sufficiency of the consideration; its legality and morality; the assent of the parties; and the absence of fraud.

§2. To make a sale valid, the thing to be sold must have an actual or a possible existence, and be capable of delivery. Thus, if A sells a horse or certain goods to B; and if, at the time of the sale, the horse is dead, or the good? are destroyed; the sale is void. If the goods are partially destroyed, the buyer may either take them at a proportionate reduction of the price, or abandon the contract.

§3. But, although the thing to be sold has no actual and present existence; yet if its future existence is possible, and if it is the product or increase of something to which the seller has a present right, it is the subject of sale. Thus, a man may sell the wool that may grow on his sheep, the fruit that may grow on his trees, or the future increase of his cattle. But he cannot sell the products of the sheep or cattle which he may hereafter buy. A man may, however, agree to procure goods which he has not, and to furnish at a future time, for a certain price; and his contract will be good; though this is not strictly a sale, but an agreement to sell.

§4. There can be no sale without a price; and the price must be fixed and definite, or susceptible of being ascertained by reference to some criterion prescribed in the contract, so as to render any further negotiation of the parties unnecessary. Thus, a man may agree to pay what shall be the market price at a particular time, or a price to be fixed by a third person. The price must also be payable in money or its negotiable representative, as notes or bills. One article given for another is merely barter. The same principles of law, however, govern in both cases.

§5. There must be a mutual consent of the parties, and the contract is binding when a proposition made by one party is accepted by the other. The negotiation may be carried on by letter, as before stated. (Chap. LIV, §7.)

§6. In contracts of sale which are not perfected at once by payment and delivery, certain formalities are to be observed. These forms generally are prescribed by what is called the English statute of frauds, which requires, (1.) that the buyer shall accept and receive part of the goods sold; or (2.) give something in earnest to bind the bargain, or in part payment; or (3.) that some note or memorandum in writing of the bargain shall be made and signed by the party to be charged, or by his authorized agent. These provisions, however, apply only to cases in which the price of the goods sold is ten pounds sterling, or more. The same rule prevails generally in this country, with slight variations in some states. The price of the goods sold, in cases to which the provisions of that statute apply, is fixed by law in many of the states, and varies from $30 to $200.

§7. To complete a contract of sale, and pass the title to the property to the buyer, there must be a delivery of the goods sold. When the goods are such as cannot be manually or immediately delivered, or are not in the actual custody of the seller, the law does not require an actual delivery. But they must be placed in the power of the purchaser; or there must be such acts and declarations of the parties as imply a change of ownership. When the right of property has been transferred to the buyer, whether by an actual or only a constructive delivery, he immediately assumes the risk of the goods; so that if they shall be afterward injured or destroyed, he must bear the loss.

§8. When nothing is said at the sale as to the time of delivery, or the time of payment, the buyer is entitled to the goods on payment or tender of the price, and not other wise; for, though he acquires the right of property by the contract of sale, he does not acquire the right of possession, until he pays or tenders the price. But if the seller delivers the goods absolutely, and without fraudulent contrivance on the part of the buyer, the buyer will hold possession of them.

§9. But when goods are sold on credit, and nothing is said as to the time of delivery, the buyer is immediately entitled to the possession. If, however, it is ascertained, before the buyer obtains possession of the goods, that he is insolvent, or so embarrassed as to disable him from meeting the demands of his creditors, the seller may stop the goods as a security for the price. But if they are stopped without good cause, or through misinformation, the buyer is entitled to the goods, and to damages which he may have sustained in consequence of their stoppage.

§10. In the sale of a chattel, if the seller has possession of the article, and sells it as his own, he is understood to warrant the title. A fair price implies a warranty of title; and the purchaser may have satisfaction from the seller, if he sells goods as his own, and the title proves deficient. But if the possession is at the time in another, and there is no covenant or warranty of title, the party buys at his peril. It is thought, however, if the seller affirms that the property is his own, he warrants the title, though it is not in his possession.

§11. With regard to the quality of the thing, the seller is not bound to make good any deficiency, except under special circumstances, unless be expressly warranted the goods to be sound and good, or unless he made a fraudulent representation or concealment concerning them. The rule is, if there is no express warranty by the seller, nor fraud on his part, and if the article is equally open to the inspection of both parties, the buyer who examines the article for himself, must abide by all losses arising from latent defects equally unknown to both parties.

§12. But this rule does not reasonably apply to cases in which the purchaser has ordered goods of a certain character, or in which goods of a certain described quality are offered for sale, and, when delivered, they do not answer the description. There being no opportunity of examining them, there is an implied warranty of the quality. An intentional concealment or suppression of a material fact, when both parties have not equal access to means of information, is unfair dealing, and renders the contract void.

§13. As a general rule, each party is bound to communicate to the other his knowledge of material facts, provided he knows the other to be ignorant of them, and they are not open and naked, or equally within the reach of his observation. Surely the moral law and fair dealing require, in all cases, a full disclosure of all defects within the knowledge of the contracting parties.