Putnam's Handy Law Book for the Layman

by Albert Sidney Bolles

A contract of sale may be conditional, for example, that the property shall not be transferred until the price is paid. Though the property is transferred by the sale, promises or obligations may still be unperformed by the seller. Or the transfer of the title may be conditional on payment of the price. In such sales the goods are delivered to the buyer, but the title is retained by the seller until payment.

The capacity to buy and sell is regulated by the general law concerning the capacity to contract, transfer and acquire property. When necessaries are sold and delivered to a minor, or to an insane or drunken person, or to a married woman, who is lacking in mental capacity to make a contract, he must, by the general Sales Act, pay a reasonable price therefor. Necessary goods by this act mean those suitable to the condition of the life of the minor or other persons above mentioned at the time of their purchase and delivery.

As we have seen (See Minor) a minor may avoid his contracts. The right to do this is given for his protection, and should not be stretched beyond his needs. Therefore the right is confined to himself or his legal representatives. Neither creditors, nor trustees, nor assignees in bankruptcy can do this, but his heirs can do this, and probably his guardian. By the common law a purchaser for value who did not know that the seller bought them of a minor could not retain them if the minor wished to reclaim them as his own. This rule has been changed by the Sales Act, and a bona fide purchaser is therefore safe in purchasing such goods even though the seller did buy them from a minor.

As a minor may disaffirm his contract, any act clearly showing this intent is sufficient. "It was early settled," says Williston, "that an infant's conveyance of realty could be avoided only after he attained his majority. In the case of personal property a sale may be avoided during his minority by an infant seller or buyer. Though an infant may thus avoid his sales, purchases or contracts during infancy, he can make no effective ratification until he becomes of age, for an infant's ratification clearly can be no more effective than his original bargain."

In the Sales Act the Statute of Frauds (See Statute of Frauds) has been reënacted, and provides that in a sale or contract to sell goods amounting to five hundred dollars or more, it cannot be enforced unless the buyer shall accept a part of the goods, or give something in earnest to bind the contract, or in part payment, or makes some note or memorandum in writing of the sale which is signed by the party or his agent against whom the other party seeks enforcement.

This statute applies to a contract for goods that may be intended for future delivery, but not to goods that are to be manufactured by the seller especially for the buyer and are not suitable for sale to others in the ordinary course of the seller's business.

The Sales Act contains an important section relating to the sale of an undivided share of goods. If the parties intend to effect a present sale, the buyer becomes an owner in common with the owner of the remaining shares. How important is this section may be easily learned. The grain of many owners is often mingled in an elevator. It is delivered to those who call for it, the kinds and quantities mentioned in the receipts given to them at the times of storing it. The grain in the elevator may be delivered many times before a particular depositor makes his demand. The elevator company must keep on hand enough grain to meet all outstanding receipts. Each depositor thus retains title to some portion of the grain in the elevator. The company is the bailee with the power to change the bailor's separate ownership into an ownership in common with others of a larger mass, and back again. At any given moment all the holders of receipts for the grain are tenants in common of the amount in store, each owning a share and all owning the entire amount, each having the right to sell his share and demand its separation and delivery in accordance with custom and the terms of the receipt.

When a party has specific goods which, without his knowledge, have perished partly or wholly, the buyer may treat the sale as avoided, or as transferring the property in all of the existing goods and as binding him to pay the full agreed price if the sale was indivisible, or if divisible the agreed price for the goods in which the property passes. One can readily imagine trouble when none of the goods have been destroyed but all are in a condition inferior to that supposed at the time of the bargain. In such a case the "only question is whether the article has been so far destroyed as no longer to answer the description of it given by the contract."

The price may be fixed by the contract or in such a manner as the parties may agree, and may be made payable in personal or real property. When the price is not determined in the way mentioned in the Sales Act, the buyer must pay a reasonable price. This is a question of fact in each case. Usually, the price, either in an executed sale or in a contract to sell, is fixed by the parties at the time of making the bargain. In the agreement to sell there must be a consideration on both sides to sustain it. Sometimes the parties agree that the amount of the price shall vary according to the happening, or failure to happen, of a future event. Such a contract may be a wager, which is forbidden by law, or it may be legal, as we shall soon learn. Whenever no price has been fixed the law has established a rule, a reasonable price. It is the intention and understanding of the parties that a buyer who orders a barrel of flour from his grocer will pay a reasonable price. Likewise a buyer who orders a carriage to be made for him and says nothing about the price.

What is a reasonable price? Generally the market price at the time and place fixed by the contract or by law for delivering the goods, but not always. Under unusual conditions the market price does not furnish the only test. Said the court in one of these cases: a reasonable price may or may not agree with the current price of the commodity at the place of shipment at the precise time of making it. The current price of the day may be highly unreasonable from accidental circumstances, by the action of the seller himself in purposely keeping back the supply.