Understanding Sales of Goods Act

• Mercantile law is a body of law governing business and commercial transactions.
• It stems from the historical customs and practices of merchants and traders.
• Key aspects of mercantile law: Sales of Goods, Company Law, and Negotiable Instruments.

Sales of Goods

• The Sale of Goods Act regulates contracts where property in goods is transferred or agreed to be transferred from seller to buyer for a price.
• Sales contracts can be absolute or conditional.
• Goods can be existing or future goods.
• The price can be fixed or determined through a course of dealing.
• Implied conditions include the right to sell, goods matching descriptions or samples, and merchantable quality.
• Implied warranties include quiet possession and freedom from encumbrances.
• Transfer of property determines when the buyer becomes the owner.
• Transfer of property rules depend on whether goods are specific/ascertained or unascertained.
• "Nemo dat quod non habet" means one cannot give what they do not have.
• Exceptions to "nemo dat" protect bona fide purchasers in certain situations.
• Buyer's remedies are determined by the seller's breach of condition or warranty.
• Seller's remedies include suits for price, damages for non-acceptance, and liens on goods.
• An unpaid seller has rights against goods, including lien, stoppage in transit, and resale.

Company Law

• A company is a separate legal entity, distinct from its shareholders.
• It possesses perpetual succession, unaffected by membership changes.
• It can own property, enter contracts, sue, and be sued in its own name.
• Companies are formed through registration under the Companies Act.
• Private companies restrict share transfers and limit member numbers.
• Public companies can offer shares to the public.
• A holding company controls others through majority shareholding.
• The Memorandum of Association outlines the company's objectives and scope.
• The Articles of Association detail rules for internal company management.
• Directors manage the company's affairs.
• Shareholders elect directors and have voting rights.
• Meetings include statutory, annual general, and extraordinary general meetings.
• Dividends are profits distributed to shareholders.
• Companies can borrow money through debentures and loans.
• Auditors examine the company’s financial records.
• Winding up involves liquidating assets and distributing them to creditors and shareholders.
• Winding up can be compulsory (by court order) or voluntary (by members or creditors).

Negotiable Instruments

• A negotiable instrument guarantees payment of a specific sum of money, either on demand or at a set date.
• Freely transferable, allowing the holder to sue in their own name.
• Examples: promissory notes, bills of exchange, and checks.
• A promissory note is a written promise to pay.
• A bill of exchange is an order to pay.
• A cheque is a bill of exchange drawn on a banker, payable on demand.
• Key parties: drawer, drawee, payee, endorser, and endorsee.
• Negotiation is the transfer of a negotiable instrument to another.
• Endorsement is signing the back to transfer ownership.
• Types of endorsement: blank, special, and restrictive.
• A holder can possess the instrument in their own name and receive payment.
• A holder in due course acquired the instrument for value, in good faith, without notice of defects.
• The holder in due course secures a better title than the transferor.
• Dishonor occurs when payment is refused.
• Notice of dishonor must be given to liable parties.
• Noting and protesting are formal procedures for recording dishonor.