(a) Define a contract of sale (b) Outline six items that must be contained in a contract sale.
Question 1 Report
(a) Define a contract of sale
(b) Outline six items that must be contained in a contract sale.
Answer Details
(a) Definition of a contract of sale
A contract of sale is a legally binding agreement in which the seller transfers or agrees to transfer the ownership (property) in goods to the buyer for a money consideration called the price. It is an agreement enforceable at law between a buyer and a seller for the exchange of goods for money.
(b) Six items that must be contained in a contract of sale
- The parties: the names and addresses of the buyer and the seller.
- Description of the goods: the nature, type, quality and quantity of the goods being sold.
- The price: the amount of money to be paid and the currency.
- Terms of payment: whether payment is by cash or credit, and details of any discount allowed.
- Terms of delivery: the place, date and mode of delivery, and who bears carriage and insurance (for example F.O.B. or C.I.F.).
- Passing of ownership and risk: the point at which title to, and risk in, the goods passes from seller to buyer.
Other items that may be included are the conditions and warranties, and the signatures of the parties or their agents.
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