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.