KYOSABA DERICK
GULU UNIVERSITY
P. O. BOX 166 Email: [email protected].
Gulu-Uganda Tel: +256 760291444
FACULTY OF LAW
COURSE UNIT: SALE OF GOODS
LECTURER’S NAME: PROF AGASHA MUGASHA.
COURSE CODE: GBL 1203.
REG NO: 23/U/1554/GBL/PS.
STUDENT NAME: KYOSABA DERICK.
INDIVIDUAL ASSINGMENT
Instructions:
Hand in date: 25th March, 2024.
Expected length: 1500 – 2000 words (not counting the cover page and the
bibliography).
Indicate the computer word count on the cover sheet.
Essays will be typed with 1.5 spacing.
Question:
Relying predominantly on Ugandan and East African materials, analyze the distinction between
the following
(a)- sale of goods v supply of services;
(b)- sale of goods v a contract of loan on security
The sale of goods in Uganda is principally governed by sale of goods Act cap 82 which is a
codification of the long era common law judicial decision from England and it sets out the
framework of sale of goods between the buyer and the seller.
According to section 2(1) of the sale of goods and supply Act defines a contract of sale of goods
as a contract by which the seller transfers or agrees to transfer the property in the goods to the
buyer for a Money consideration called " price".1
The essentials of a contract of sale of goods include the parties (seller and the buyer), subject
matter and the price. For instances in the case of Bakeina v Yuasa investments limited where it
involved the sale of a car and it was observed that the plaintiff had not been afforded an
opportunity to examine the vehicle until the mechanic informed the plaintiff that it lacked
enough thrust power and needed an engine overhaul and that until then he had a right to reject
it and exercise all remedies available for her.2
Supply of services is defined under section 3(1) of the sale of goods and supply of services Act
2017 as a contract where a person agrees to carry out a service whether goods are; 3
(1) transferred or are to be transferred; or
(2) bailed or are to be bailed by way of hire, under the contract, regardless of the nature of the
consideration for which the service is to be carried out.
(a) sale of goods v supply of services.
The following are the differences between the sale of goods v supply of services.
Sale of goods involves the transfer of ownership of tangible, physical items (goods) from one
party to another for a money consideration called “price”. The goods may include future goods
as defined under Section(1)(b) of the sale of goods and supply Act 2017 to mean good to be
acquired by the seller after making of the contract or ascertained goods under Section (1)(f) to
1
section 2(1)
2
Bakeina v Yuasa investments limited (HCCS 136 of 2013)
3
section 3(1)
mean goods which are being identified and agreed upon at the time the contract is made. 4 In
Uganda MTN company provides goods such as phones and MTN lines which are tangible and
when Uganda exports beans and maize to East African countries like Kenya, this is also sale of
goods whereas;
Supply of services involves the provision of intangible services, actions, tasks and work for a fee
and also focuses on delivering services or performing a task rather than transferring of
ownership of a tangible item. Examples include consulting services, repair services, legal
services and so forth. In Uganda MTN company provides telecommunications services, teachers
and lecturers provide educational services, doctors provide healthcare services and all are being
paid for their services.
Section 15 of the sale of goods and supply of services Act cap 2017 under sale of goods
provides that there is an implied condition that the goods supplied under the contract are
reasonably fit for that purpose.5 The basic rule as regards to fitness for the purpose is the
principle of caveat emptor (buyer be aware). The buyer who is this circumstance is the
consumer is deemed to know what he wants to order for such and should not hold the seller if
the goods later fail to answer the order of the buyer. However, there are exceptions to this
section for example in instances where the seller sells goods in the course of the business. In
the case of Doola Singh and Sons v Uganda Foundry and machine works it was held that there
was in an implied warranty that the parts manufactured should be such as would we fitted
together and made in a saw bench be reasonably fit to constitute a machine capable of doing
the work usually done by a saw bench whereas;6
Supply of services under Section 16 of the sale of goods and supply Act cap 2018 provides that
where materials are used for the supply of services, there is an implied term that the materials
will be of sound and reasonably fit for that purpose for which they are required. This protects
the buyer in a way that the supplier of services will have to use the materials that are in
conformity with the type of services the consumer seeks to be supplied with and section 18
4
Section(1)(b)
5
Section 15
6
Doola Singh and Sons v Uganda Foundry and machine works
provides that, in the contract for the supply of services where the supplier is acting in the
course of the business, there is an implied term that the supplier will have to carry out the
service with reasonable care and skills. 7
If the contract is for the sale of goods, the implied duties under the sale of goods Act are
incorporated in the contract, and remain prima facie duties of strict liability under section 27(1)
of the sale of goods and supply Act 2018. 8 That is to say, the seller is responsible for the defects
in the goods, even in the absence of negligence whereas;
If the contract is for the supply of services, then in so far as the services themselves are
concerned, the supplier’s duties are generally duties of due care only, but where the goods
were supplied accidentally as part of such a contract, it is generally held that the supplier’s
duties as regards the goods supplied were strict, at any rate in transaction for commercial
services.
Sale of goods involves real substance of the contract which is the ultimate result of the goods to
be produced for example the contract for the construction of two ships propellers in the case
held by the house of Lords in Commel and Co Ltd v Manganese Bros and Brass Co Ltd whereas,
Under the supply of services, the substance of the contract is the skill and labor of the supplier.
For example, the contract for painting of a picture is a contract for services, the skill of the artist
is clearly more important than the incident fact that the property in the complicated picture will
pass to the client.
(b) sale of goods v a contact of loan on security.
The following are the differences between sale of goods v a contract of loan on security as
explained below.
Sale of goods is defined under section 2(1) of sale of goods and supply Act 2018 as a contact by
which the seller transfers or agrees to transfer the property in the goods to the buyer for a
money consideration called the “price”. Transfer of ownership is upon the completion of the
7
section 18
8
section 27(1)
contract of sale of goods, in this case when the seller sells the goods to the buyer, he owns
permanent possession of the goods after paying for the goods whereas;
A contract of loan on security also known as a secured loan agreement is a type of lending
arrangement where the borrower obtains a loan by pledging assets or property as security or
collateral. In this contact, the borrower agrees to repay the loan amount along with any
applicable interest and fees according to specified terms and conditions. If the borrower fails to
repay the loan as agreed, the lender has the right to seize the pledged collateral to recover the
outstanding debt.
In Uganda, the sale of goods is primarily governed by the sale of goods cap, 82. This legislation
outlines the rights and obligations of the buyers and sellers in commercial transaction of the
contract involving the sale of goods, for instance passing of property between the buyer and
the seller, that is to say ownership confers proprietary of rights and when property passes the
seller losses ownership of the property. Section 27 provides that risk passes with ownership
and section 60 states that only the seller sues for the price whereas;9
A contract of loan on security is governed by Chattels Transfer Act, 1963 and this governs
movable property, mortgage Act,2009 and governs immovable assets, companies Act 2012, the
land Act 1998 which governs land tenure ownership and land transactions in Uganda and the
Bank of Uganda Act 2000 which establishes the Bank of Uganda and provides for regulations
related to the banking, lending and secured transactions. Case point is Barclays Bank Ltd v
Katende Luttu SC 22 of 1993 where it was stated that the mortgager’s right to redeem his land
is confined to payment of a loan and if the mortgagee has the power to sell without the courts
ordering foreclosure, nothing can stop the sale.10
The nature of transaction under sale of goods is a straightforward exchange where the buyer
pays certain a mount of money in exchange for the goods and these may include clothing,
machines and so forth. Section 9(1) of the SOGSA provides that the price for the goods may be
expressly fixed by the parties in the contract of sale or the contract may provide for the
9
Section 27
10
Barclays Bank Ltd v Katende Luttu SC 22 of 1993
methods in which the price is to be fixed. 11 Case point is the case of Wamala Growers
Cooperation Union v Attorney General where the commissioner for veterinary services
advertised the sale of imported German Friesian Heifers. 12 The plaintiff applied for 31 heifers,
selected them and paid 3.5million. However, only 10 animals were delivered after a lot of
pestering. Court held since the defendant accepted payment of the animals and allowed the
plaintiff to select from the herd of over 500 heifers there was a created express contract which
was breached because the animals were already in the country at the time the offer was made
to the public through the media whereas;
The nature of transaction under the contract of loan security involves the borrower providing
collateral security to the lender as a guarantee for the repayment of the loan. Case scenario is
when centenary bank in Uganda gives out loans to its customers, they first provide collateral
security to it and the purpose is to mitigate the lender’s risk by having re course to the pledged
assets in case of default by the borrower. This makes it easier for a bank to recover its money
by selling the collateral incase the borrower fails to repay the money.
In my conclusion sale of goods as defined in section 2(1) of the sale of goods and suppl Act
2018 is a contact by which the seller transfers or agrees to transfer the property in the goods to
the buyer for a money consideration called “price”, supply of services under section 3(1) means
a contract where a person agrees to carry out a service whether the goods are-
(a)transferred or are to be transferred; or
(b)bailed or are to be bailed by way of hire, under the contract, regardless of the nature of the
consideration for which the service is to be carried.
A contract of loan on security is a type of lending arrangement where the borrower obtains a
loan by pledging assets or property as security or collateral.
BIBLIOGRAPHY
Atiyah and Adams sales of goods fourteenth edition
11
Section 9(1)
12
Wamala Growers Cooperation Union v Attorney General HCCS 1066/90(23.3.97 at Kampala)
www.lawteacher.com.net
statutes
The sale of goods Act Cap 82
The sale of goods and supply of services Act 2017
The land Act 1998
Chattels Transfer Act, 1963
The mortgage Act, 2009
Case laws
Hon. Mable Bakeina v Yuasa Investments Ltd HCCS NO.136 of 2013
Ailibhai Panju and sons Ltd v Uganda Foundry and Machine Works 12 EACA 33
