If your business deals with buying or selling goods, the Sale of Goods Act 1923 (NSW) (‘the Act’) will likely apply to you.
Understanding your obligations under this law is important to ensure that your business is getting its legals right.
Read on to learn more about the Act and how it impacts your business.
What Is The Sale Of Goods Act?
The Act predominantly governs transactions between businesses for the buying and selling of goods.
The purpose of the Act is to protect parties in commercial transactions. The Act achieves this purpose by placing a number of obligations on both parties.
With the introduction of the Australian Consumer Law (ACL) in 2010, the Sale of Goods Act 1923 (NSW) applies generally only to transactions between businesses and not to between businesses and consumers. Let’s break this down.
When Does The Sale Of Goods Act Apply?
The Act applies when a seller agrees to transfer goods to the buyer for money consideration.
There are four key elements that must be present for the Sale of Goods Act 1923 (NSW) to apply, namely:
1. A Contract Of Sale
A contract of sale is an agreement to sell goods where the ownership of the goods is to be transferred at a future time or subject to some condition.
For example, a contract of sale might contain details of what the goods are, how much they cost and when they will be transferred from the seller to the buyer.
2. The Transfer Of Property
The property must be or intended to be transferred from the seller to the buyer.
The property that is being transferred from the seller to the buyer must be goods.
According to the Act, goods are tangible objects. For example, a car, boat or aircraft would be considered a ‘good.’
Goods are not intangible items, money or a service. For example, intellectual property would not be considered a good, neither would fitness sessions with a personal trainer.
Also, if an item is a part of or attached to the land, it will not be considered a good. An example includes a house.
4. Money Consideration
Money consideration must be provided for the Act to apply.
For example, the buyer has to pay money to the seller for the purposes of acquiring the goods.
The amount of money that is required for the goods in question will be detailed in the contract for sale. Please note that the buyer must provide a reasonable amount of money consideration for the Sale of Goods Act 1923 (NSW) to apply.
For example, if a car is usually $65,000, paying $1 for the car would be unreasonable.
If the above four elements are satisfied, the Act will apply.
Who Does The Sale Of Goods Act Apply To?
The legislation applies mostly to business to business transactions.
As a result of the introduction of the ACL, the Sale of Goods Act 1923 (NSW) generally no longer applies to consumer transactions.
Examples of who the Act applies to includes:
- Businesses who sell goods to other businesses
- This may include businesses who sell items such as confectionery, gym equipment or kitchen appliances.
- Businesses who buy goods in bulk from another business
- This may include businesses who buy confectionery, gym equipment or kitchen appliances in bulk to then sell these items through their business.
Seller’s Obligations Under The Sale Of Goods Act
If your business sells or agrees to sell goods, you are defined as a seller under the Act.
As a seller you are required to deliver the goods in accordance with the terms of the contract of sale.
Under s 31 of the Act, the seller must be ready and willing to give possession of the goods to the buyer for the exchange of money.
The seller must also ensure that the goods are delivered to the buyer in a reasonable time.
What If The Buyer Doesn’t Pay For The Goods?
If the buyer fails to pay you for the goods you have provided or intend to provide, under the Act you are entitled to:
- Withhold delivering the goods to the buyer until the agreed money amount has been paid
- Resell the items
- Take action for breach of contract
Exactly what the best option is for you and your business will depend on your unique circumstances. It is best practice to get in touch with a lawyer to see what your best course of action is if you find yourself in these circumstances.
Buyer’s Obligations Under The Sale Of Goods Act
If you buy or agree to buy goods, you are defined as a buyer under the Act.
As a buyer, you are obligated to accept and pay for goods that you have agreed to buy from a seller in accordance with the terms of the contract of sale.
You must provide the correct money consideration as agreed to under the contract of sale. If you fail to do so, you risk breaching the contract for sale, having the seller withhold the goods or reselling the goods.
Further, as the buyer, you must be ready and willing to take possession of the goods. If you fail to accept the delivery of the goods in a reasonable time, you may be liable to the seller for any loss occasioned by neglecting or refusing to take the delivery.
Does The Buyer Have Any Rights Under The Act?
Under the Act, the buyer has the right to examine the goods for the purposes of ensuring that the goods are those that were agreed upon under the contract of sale.
If the goods are not in the condition that the contract of sale stipulates they should be or the goods fail to be delivered within a reasonable time, you may be entitled to damages for breach of contract.
Again, the unique circumstances of your situation will determine exactly what actions you should take, in the instance that something has not gone according to plan. As such, it is always best to seek unique advice from a lawyer.
What If I Am Not In NSW?
Each state has their own unique Sale of Goods Act.
The relevant legislation for each state can be found below:
- Sale of Goods Act 1896 (Qld)
- Goods Act 1958 (VIC)
- Sale of Goods Act 1895 (WA)
- Sale of Goods Act 1895 (SA)
- Sale of Goods Act 1972 (NT)
- Sale of Goods Act 1896 (Tas)
Sale of Goods Acts are generally similar from state to state. However, if you deal with selling or buying goods interstate, it is important to refresh your understanding of your obligations under each state’s relevant Act.
What About The ACL?
The Australian Consumer Law (ACL) applies nationally and applies to consumer transactions for the sale of goods.
The ACL defines consumer transactions as those that are acquired for the purposes of personal, domestic or household consumption. A transaction will not be a consumer transaction if goods are purchased for the purposes of resale or use for trade of commerce.
Where the ACL applies, the Sale of Goods Act 1923 (NSW) generally does not as this primarily deals with business to business and non-consumer transactions.
Determining whether the ACL or Sale of Goods Act 1923 (NSW) applies can be tricky. However, the main thing to remember is if the sale of goods is to a consumer, the ACL likely applies, equally, if the sale of goods is to a business, the Act likely applies.
For more help to determine which legislation applies to your business, it is always a good idea to get in touch with a lawyer.
Need More Help?
Understanding your obligations under the Sale of Goods Act 1923 (NSW) is important to ensure that your business is getting its legals right.
At times, it can be tricky to determine exactly what laws apply to your business and what obligations arise. To get the best advice that is uniquely tailored to you and your business, it is best to get in touch with a lawyer.
We’re here to help! Reach out to our team for a free, no-obligations chat at firstname.lastname@example.org or 1800 730 61.
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