"A sale of goods is an agreement whereby the seller transfers the property in goods to the buyer for a consideration called the price." "A contract to sell goods is a contract whereby the seller agrees to transfer the property in goods to the buyer for a consideration called the price." "A contract to sell, or a sale may be absolute or conditional."1
The law which governs contracts to transfer the ownership of goods, and the actual transfer of such ownership, from one person to another for a consideration is called the law of "Sales of Goods," or more briefly, "Sales." The law of sales thus concerns itself in the first place with the contract thereafter to pass a title, in the second place with the actual passing of title itself, and in the third place with the results of the sale, or the obligations which endure after ownership has been transferred. In any particular transaction one or more of these situations may be wanting, or they may all exist. (I) Thus A may engage with B that A will secure for and sell to B certain wagons which B agrees to buy. Now in such case no transition of ownership has as yet been effected. If A refuses to carry out his contract B has no ownership in or claim against the wagons themselves but is left to his remedy in a suit for damages occasioned by the breach. (2) Or, pursuant to the contract, A may make an actual transfer of ownership to B. He may do this, as we shall find, even though he may perhaps still retain the possession of the wagons for the time being. In such a case title - that is to say, the ownership of property in the goods - has been transferred; B may claim the wagons as his own, and if A wrongfully refuses to deliver them or, having delivered, wrongfully retakes them, B may have the aid of the courts to secure his property. This transaction constitutes the sale as distinguished from the contract to sell. A sale need not, however, be preceded by any distinct, preliminary contract such as mentioned, but all the proceedings may consist in one transaction wherein the ownership is transferred and the price paid. Yet even in such case there would usually really be a contract to sell, followed by the sale, though the interval between the two might be almost or quite inappreciable. (3) After B has secured his title there may still be existing contractual obligations. A may have undertaken to do something further to the goods, or in reference to them; or B may have undertaken that A may have the goods again if he, B, does not pay the price within a certain time. Our treatment of the law of Sales will take us into all this subject matter. The term "sales," it will thus be seen, is used in two ways: first, in a general way, to cover both the executory transaction wherein title does not yet pass and the executed transaction wherein it does, and also in a more limited way, to distinguish the latter transaction from the former. It will hereafter be used in both senses, as the context will indicate.
The consideration for which personal property is sold is called the price. It need not be money. It may be expressly fixed by the contract, or left to implication to pay a reasonable price.
"Price" is the term indicating the consideration for the sale. It may be money or not. "Barters or exchanges" are governed by the law of Sales and the Uniform Sales Act.
(a) Price implied.
The price need not be expressly arrived at but may be determined by the course of dealing between the parties.1a
If the price is not expressly stated, it may mean either that there is an omission of an essential element, or that no contract exists, or it may mean that the price is left to implication. This depends on what a person would be entitled reasonably to infer from the circumstances. Thus if one orders goods having a market price or a catalogue price, it is to be inferred that he intends to pay such market price 2 or catalogue price.3 But nego1a. Phifer v. Erwin, 100 N. C. 59.
tiations concerning the purchase of a specific horse, or second hand automobile, or any article upon which a settlement as to price would have to be made before it could be said there was any contract, would not result in contract until such price was arrived at.
2. McEwen v. Morey, 60 111. 32.
3. Paine Lumber Co. v. Betcher, 34 Minn. 480.
(b) Sale for a price to be afterwards agreed upon.
In this case the contract is incomplete as the price may never be agreed upon. If, however, the buyer keeps the goods and no price is agreed upon, the Sales Act provides a remedy of a quasi-contractual nature 4 that the buyer shall pay a reasonable price.
(c) Sale for a price to be fixed by a third party.
In this case there is a good contract, based upon a condition that may never be performed and which may therefore defeat the sale.5
If the valuation by the third party is fraudulent, neither party is bound by it and it may be set aside.
In case the valuation is not made and the buyer receives and retains the goods he is liable for a reasonable price.
(d) Price to be ascertained by future event.
The price may be ascertained by a future event, as, the future market price. In such case, the contract is a valid one.
A conditional sale is a sale in which the transfer of ownership depends upon a condition the breach of which will defeat the title if it has passed, or prevent it from passing if it has not passed.
4. Williston on Sales, p. 203.
5. Sales Act, SEC. 10.
The term "conditional sale" is correctly used to describe two situations. The first is that situation in which one transfers the ownership of goods to another upon a provision that the ownership shall come back and revest in him if he, the seller, does something within a certain time, or providing the buyer does something or fails to do something within a certain time.
The usual transaction, however, which this term is used to describe, is the familiar one in which one transfers the possession of goods to another but provides that title shall not vest in the other until the purchase price is paid or some other act done. The title is retained for purposes of security. Selling goods on the installment plan and providing that the title shall remain in the seller until the last installment is paid is a familiar example.6
A gift is a transaction wherein one person for no consideration, that is, gratuitously, transfers to another ownership in property.
There is a fundamental distinction between a gift and a sale. One is a purely gratuitous act, whereas the other is contractual in nature, imposing obligations enforceable in the courts. A promise to make a gift is unenforceable; if broken there is no remedy. If the gift is made, the giver parts with whatever title he had and no more. In fact, if he have creditors hindered or delayed from the collection of their claims by such gift, such creditors may have it set aside as a transfer which is fraudulent as to them. But a sale may in many cases give a better title than the seller himself had. That subject is discussed more at length hereafter. And even an insolvent debtor may sell his goods to a purchaser in good faith (subject, of course, to the lien of such mortgages, judgments, etc., as may be of record and in force). (Sales have been distinguished from Bailments in Chapter 1 of Subdivision I, supra.)
6. For remedies in conditional sales, see post, SEC. 95.
In a gift there can be no warranty. That one "must not look a gift horse in the mouth" is as good law as it is good sentiment.