Sale of Goods Act Reform: Reconciling the Provisions on the Examination and Acceptance of Goods

This article is another article in the series of articles highlighting possible reform issues in respect of the Sale of Goods Act 1893 presently in force in Nigeria. The two previous articles on the issue are available here and here.

In this article, we discuss the provisions of the Sale of Goods Act 1893 dealing with the examination and acceptance of goods, pointing out the inconsistency in the provisions, and suggesting possible amendment to the provision of section 35 of the Act with a view to ensuring clarity and consistency.

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By virtue of section 34 of the Sale of Goods Act 1893, where goods are delivered to a buyer who has not previously examined them, the buyer is not deemed to have accepted the goods unless he has had a reasonable opportunity of examining them to ascertain whether the goods are in conformity with his contract with the seller. This provision seems to be inconsistent with a portion of section 35 of the Sale of Goods Act 1893 dealing with acceptance of goods by a buyer.

In providing for the acceptance of goods by the buyer, three methods of manifesting acceptance are provided for in section 35. These are:

  • When the buyer intimates to the seller that he has accepted the goods.
  • When the goods have been delivered to the buyer, and he does any act in relation to the goods which is inconsistent with the ownership of the seller.
  • When, after the lapse of a reasonable time, the buyer retains the goods without intimating to the seller that he has rejected them.

Of the three methods of manifesting acceptance above, the second method (that is, when the buyer does any act in relation to the goods which is inconsistent with the ownership of the seller) is apparently inconsistent with the buyer’s right of examination of the goods provided for in section 34. This issue has adjudicated upon in a couple of cases. In the case of Hardy & Co v Hillerns and Fowler [1923] 2 KB 490, Messrs. Hillerns & Fowler bought a large quantity of Rosario or Santa F wheat to be shipped from a port in Uruguay to Hull at a certain price including freight and insurance, payment to be by cash in London against shipping documents. The ship sailed and arrived in Hull on March 18. On March 20 the buyers’ bankers in London took up the shipping documents. On the 21st the ship commenced to discharge the wheat, and on the same day the buyers sold to sub-purchasers portions of the wheat so discharged: 200 qrs. to a purchaser at Barnsley, 100 qrs. to a purchaser at Nottingham, and 500 qrs. to a purchaser at Southwell. In order to fulfil those sub-contracts they on the same day, March 21, despatched the quantities so sold to Barnsley, Nottingham and Southwell. They had taken samples of wheat on the 21st, which samples had raised a suspicion that the cargo was not according to the contract description. But they allowed the discharge to continue, and on the 22nd took further samples, which satisfied them that their suspicions were well founded, and on the 23rd they gave the sellers notice that they rejected the wheat. Upon those facts the sellers contended that under the terms of section 35 the buyers must be deemed to have accepted the goods and lost their right of rejection. The arbitration tribunal found that the wheat was not in accordance with the contract, but that owing to the difficulty of getting a fairly representative sample until a considerable portion of the cargo had been discharged it was reasonable for the buyers to delay making up their mind to reject until the 23rd. The question in this case, according to the Court of Appeal, was whether the buyers by so reselling and forwarding to the sub-purchasers portions of the wheat had lost the right to reject them. It was held that the act of dispatching them to the sub-buyer was inconsistent with the seller’s ownership. Even though the buyer had not had a reasonable opportunity of examination, he had lost his right to reject.

The decision was widely criticised by scholars. In fact, the courts in some jurisdictions have avoided following the decision by distinguishing the case. The major grouse with the decision in Hardy is the fact that it is supportive of acceptance occurring even before the buyer has had a reasonable opportunity of examining the goods. To remedy the situation, section 4(2) of the Misrepresentation Act 1967 of the United Kingdom inserted some words into section 35 of the Sale of Goods Act 1893 to make it clear that the buyer could not accept by doing an act inconsistent with the seller’s ownership following delivery unless he had been afforded a reasonable opportunity of examining the goods. This situation is still the same in the Sale of Goods Act 1979 of the United Kingdom. The phrase “except where section 34 above otherwise provides”, in brackets, was inserted before the second manifestation of acceptance under section 35.

Clearly, section 35 requires to be made subject to section 34 if the buyer’s right to examination of the goods before acceptance is to be protected. The approach adopted in the United Kingdom, though intended to remedy the problem, appears somewhat confusing. Consequently, it is suggested that instead of the phrase used in the Sale of Goods Act 1979 of the United Kingdom, the phrase “subject to section 34” should be inserted before the second manifestation of acceptance in section 35. If this suggestion is implemented, the provision will then read thus: “subject to section 34, when the goods have been delivered to him, and he does any act in relation to them which is inconsistent with the ownership of the seller”. This clearly puts the matter beyond doubt that a buyer should always be afforded a reasonable opportunity of examining the goods before acceptance can occur.

Next week, we shall discuss another issue which is germane to the reform of the Sale of Goods Act in Nigeria. But should you have any comments on the suggested amendment to section 35 above, kindly share them using the comments area of this post below. If you are already a registered user, you will be required to log in to comment on this post; otherwise, you will have to register before posting your comment. Registration is simple and FREE.

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