The Act contains several textual features and thresholds that generate practical pitfalls if not addressed in contract design or commercial practice.
Property vs possession and risk following property
- Risk normally follows property (s 25). Parties who assume that risk always follows delivery may be surprised: if property has not passed because goods were unascertained or appropriation did not occur, the seller may still bear risk. Conversely, a buyer may incur risk before paying if property was appropriated. Draft clear terms on appropriation, delivery and reservation of disposal (s 24) to control allocation.
Reservation of right of disposal,use it to preserve seller’s rights
- A seller may reserve the right of disposal until conditions are met (s 24). Failure to include express reservation may result in unintended transfer of property on delivery to carrier or bailment where the seller did not intend that outcome (see Rule 5 in s 23(1)-(2) and s 24(2)). Where a seller wishes to keep title until payment, use clear retention-of-title or bill of lading arrangements.
Delivery to carrier can be risky for unpaid sellers
- If goods are delivered to a carrier without reserving the right of disposal, the lien is lost (s 49(1)(a)). Sellers who send goods for transmission should either reserve disposal or ensure documents of title and payment terms align to protect lien and stoppage rights (s 24, s 49).
Buyers must examine and notify within time-limited windows under CISG
- Under the Schedule (CISG), buyers must examine the goods within a short period practicable and must give notice specifying the lack of conformity within a reasonable time after discovery, and in any event within two years of handing over (Article 38-39). Failing to give timely notice may forfeit remedies under the CISG; parties engaging in cross‑border sales must be aware of these strict notice regimes.
Documentary holders and good faith
- Taking a document of title in good faith for value can defeat prior claims and the unpaid seller’s stoppage rights (ss 71, 72). Buyers or financiers who accept documents should ensure they have clear chain of custody proof and that there was no notice of defects. Sellers and creditors should be aware that transfer of documents may extinguish or subordinate their rights.
Sea‑carriage and electronic documents require agreement
- Part IVA allows sea‑carriage documents to be data messages and requires application with "necessary changes and in accordance with procedures agreed between the parties" (s 90(2)). Absent agreed procedures, the legal effect and transfer mechanics of electronic documents may be uncertain. Parties should incorporate procedural agreements and authentication methods into contracts for carriage.
Bulk sales and allocation of co‑ownership
- Section 25A creates undivided shares in a bulk where certain conditions are met, converting buyer interests into ownership in common once payment for part of the bulk occurs. This can create shared ownership and reduce remedies against the bulk if aggregate buyer shares exceed quantity in bulk (s 25A(4)). Buyers and sellers in fundraising, grain, mineral or bulk markets should structure payments and delivery obligations to avoid unexpected pro rata reductions or disputes.
Merchantable quality and examination caveats
- Merchantable quality implied under s 19(b) is excluded where the buyer has examined the goods and defects would have been revealed by that examination. Sellers who want to rely on an "as is" purchase should ensure buyers’ rights of examination and acceptance are clearly documented and that goods are made available for inspection (s 41).
Hire‑purchase repossession accounting burdens
- Owners who repossess under ss 120-121 must account for sale proceeds or value, and the owner bears the onus of proving that sale proceeds were the best reasonably obtainable (s 121(4)). Failure to take reasonable steps to obtain the best price can expose the owner to claims from the hirer.
Limitation on excluding implied terms
- The Act permits negation of implied terms by express agreement or usage (s 61), but the practical ability to exclude certain implied terms depends on the nature of the transaction and the presence of statutory protections or fair trading laws external to this Act. Care is required when drafting exclusion clauses to ensure enforceability.
Evidential primacy of signed bills of lading
- Section 96 makes a signed bill of lading conclusive evidence as to shipment in favour of a lawful holder. Parties relying on documentary evidence should be aware that a signed bill can shift burdens and create a conclusive presumption that may be difficult to rebut.
Overall, the common theme is that statutory default rules are fact-sensitive and pivot on possession, knowledge and good faith. Contracts that do not expressly allocate title, risk, inspection rights, or set out procedures for electronic documents may invite litigation or unintended transfers of loss. The statute provides mechanisms to manage many of these issues but does not substitute for explicit contract drafting and procedural arrangements.