Sale of Goods Act 1895

The Act applies to any "contract of sale of goods" as defined in s 1 and interpreted through the s A2 definitions. "Goods" include all chattels personal other than things in action and money, plus emblements, industrial growing crops and things attached to land that are agreed to be severed. "Buyer" and "seller" are defined broadly to cover anyone who buys or agrees to buy, or sells or agrees to sell. Consequently the statute binds every natural person and corporation within South Australia who enters a contract whose subject matter meets the statutory definition.

Consumers making retail purchases, farmers selling livestock or crops, manufacturers supplying components, importers distributing commodities, and online platforms facilitating domestic sales are all directly affected. The Act does not apply to contracts intended to operate as mortgages, pledges, charges or other security (s 59(4)), nor to pure service contracts or sales of land. It binds the Crown where the Crown acts as buyer or seller in the ordinary course of commerce.

Because many provisions operate by implication of law, even parties who never read the statute are subject to its implied conditions of title (s 12), correspondence with description (s 13), fitness for purpose and merchantable quality (s 14) and the sample rules (s 15). Unpaid sellers across all sectors gain the statutory lien and stoppage rights; buyers everywhere obtain the examination and rejection rights in ss 34-36. The 2008 bulk-goods amendments in s 20A particularly affect traders in grain, fuel, minerals or any fungible commodity stored in identified bulk.

Professional intermediaries are also within scope: mercantile agents (defined in s 25(3)), carriers, warehousemen and auctioneers must observe the delivery, insurance and title rules. Insolvency practitioners encounter the Act when determining whether property has passed (ss 16-20A) or when an unpaid seller seeks to exercise stoppage in transitu against an insolvent buyer (s 43).

The Act allocates duties and rights with precision. The seller's primary duty is to deliver the goods, the buyer's to accept and pay (s 27). Delivery and payment are concurrent conditions unless the contract provides otherwise (s 28). The seller must put goods into a deliverable state at his own expense (s 29(5)) and, where carriage is involved, make a reasonable contract with the carrier (s 32(2)) and give insurance notice where sea transit is usual (s 32(3)-(5)).

The buyer enjoys a right to examine goods before acceptance (s 34) and is not deemed to accept until he has had a reasonable opportunity (s 34(1)). He may reject for wrong quantity (s 30), mixed goods (s 30(3)) or breach of condition, subject to the acceptance rules in s 35 and the non-severable contract rule in s 11(3). On breach of warranty he may set off damages against the price or sue (s 52).

The unpaid seller's rights against the goods are perhaps the most distinctive. While in possession he holds a lien for the price in three situations: no credit stipulated, credit term expired, or buyer insolvent (s 40). The lien is not lost by obtaining judgment (s 42(2)). On parting with possession the seller gains stoppage in transitu upon buyer insolvency (s 43), exercisable until the buyer or agent takes delivery (s 44). Both lien and stoppage survive buyer sub-sales unless the seller assents or a document of title is transferred to a good-faith purchaser for value (s 46). After proper notice or in the case of perishables the seller may resell and recover damages (s 47(3)).

Property and risk rights are central. The buyer acquires an undivided share in bulk once payment is made for a specified quantity from an identified bulk (s 20A(2)), becoming a tenant in common with proportionate share (s 20A(3)). Risk passes with property unless otherwise agreed or fault intervenes (s 20). Title rights include the implied condition of title (s 12(a)), the nemo dat rule and its exceptions (ss 21-26), and the revesting on theft conviction (s 24).

Remedial rights are symmetrical. The seller may sue for the price (s 48) or damages for non-acceptance (s 49). The buyer may sue for damages for non-delivery (s 50), seek specific performance (s 51) or claim for breach of warranty (s 52). Interest and special damages are preserved (s 53).

The Act creates no criminal offences or monetary penalties imposed by the state. Enforcement is entirely civil. Rights declared by the Act "may, unless otherwise provided, be enforced by action" (s 56). Thus the unpaid seller enforces his lien or stoppage by physical retention or notice; the buyer enforces rejection by intimating refusal (s 36). Monetary remedies sound in debt (action for the price under s 48) or damages (ss 49, 50, 52).

Where a seller wrongfully retains goods after property has passed, the buyer may seek specific performance (s 51) or damages measured by the contract-market differential (s 50(3)). A buyer who wrongfully refuses delivery is liable for natural loss plus reasonable storage charges (s 37). Breach of the implied conditions in ss 12-15 entitles the buyer, before acceptance, to reject and treat the contract as repudiated; after acceptance the breach is treated as warranty giving damages only (s 11(3), s 52).

Auction contraventions (s 57(1)(c)) render the sale fraudulent, allowing the buyer to treat it as such. Draft-allowance clauses in wool and sheep-skin contracts are void (ss 57A, 57B), so the statutory price calculation applies without them. The Act's enforcement therefore relies on private litigation, self-help remedies and the ordinary machinery of civil courts. Courts determine questions of fact such as reasonableness of time (s 55), reasonable price (s 8(2)) or whether circumstances show waiver of lien.

The Sale of Goods Act 1895 is expressly not a complete code. Section 59(2) preserves the rules of common law, including the law merchant, save insofar as they are inconsistent with the express provisions. Rules relating to principal and agent, fraud, misrepresentation, duress, mistake and other invalidating causes continue to apply. Insolvency rules are untouched (s 59(1)). Enactments relating to bills of sale and any unrepealed sale statutes remain in force (s 59(3)).

The Act cross-references the Mercantile Law Act 1936 for the definition of "document of title" (s A2) and for certain title exceptions (s 21(2)(a)). The Goods Securities Act 1986 is engaged by s 25(4), which provides that the buyer-in-possession rule does not defeat a registered security interest. The Misrepresentation Act 1972 (noted in the legislative history) interacts with the implied terms regime.

Federal statutes such as the Competition and Consumer Act 2010 (Cth) overlay consumer guarantees that cannot be excluded, creating a dual regime: the Sale of Goods Act supplies the baseline contractual rights while Commonwealth law adds non-excludable statutory guarantees for consumers. The Personal Property Securities Act 2009 (Cth) has largely superseded older registration regimes but the 1986 South Australian Act is still referenced in s 25(4).

The Statutes Amendment (Bulk Goods) Act 2008 inserted s 20A and amended s 16, aligning the South Australian position with reforms in other Australian jurisdictions and the United Kingdom's Sale of Goods (Amendment) Act 1995. Section 54 permits exclusion of implied terms by express agreement, course of dealing or usage, but only to the extent not prohibited by consumer-protection legislation.

The most significant recent substantive change was effected by the Statutes Amendment (Bulk Goods) Act 2008, which commenced on 12 December 2008. It inserted the definition of "bulk" into s A2(1), amended s 16 to make it subject to s 20A, and inserted the ten-subsection s 20A. The mischief addressed was the pre-2008 rule that no property could pass in unascertained goods until they were ascertained (former s 16). In commodity trades where grain, oil or minerals are stored in large undifferentiated masses, buyers who had paid for a quantity could find themselves unsecured creditors if the seller became insolvent before physical separation. Section 20A creates an immediate undivided co-ownership interest once the bulk is identified and payment made, with proportionate sharing, deemed consents to delivery, and protection from liability. The provision does not apply to contracts entered before commencement (s 20A(10)).

Earlier amendments modernised language and removed obsolete provisions. The Statute Law Revision Act 2003 restructured headings, redesignated paragraphs (e.g. s 12 I-III became s 12(a)-(c)), deleted spent sections (s 4, ss 61-62) and updated the Schedule. The Goods Securities Act 1986 inserted s 25(4) to protect registered security interests from the buyer-in-possession rule. The 1936 and 1952 amendments introduced ss 57A and 57B to prevent unfair "draft allowance" deductions in wool and sheep-skin trades, reflecting industry complaints about inaccurate weighing practices. The 1982 Act deleted the writing requirement formerly in s 4, bringing the statute into line with modern contract formalities.

These changes were driven by the need to keep a nineteenth-century code functional for twenty-first-century commerce, particularly bulk handling, electronic commerce and harmonisation with national personal-property-security reforms.

Because the Act is a codification, litigation has centred on the meaning of its express terms and the boundaries of the preserved common law. The distinction between condition and warranty in s 11 has generated controversy; the statute itself acknowledges that a stipulation may be a condition although called a warranty (s 11(2)), leaving construction to the court. The non-severable contract rule in s 11(3) has been criticised for forcing a buyer who has accepted part of a large consignment to lose the right to reject the whole for breach of condition.

The presumptive rules in s 18 have produced repeated disputes over "deliverable state" (defined in s A2(4)) and "unconditional appropriation". Rule 1's immediate passage of property in specific goods in a deliverable state means risk passes before physical delivery (s 20), a result many commercial parties find counter-intuitive and which has led to widespread use of retention-of-title clauses under s 19.

Section 14's implied condition of merchantable quality has been contentious where goods have latent defects not discoverable by reasonable examination. The proviso in s 14(b) that examination negates the condition for defects that "such examination ought to have revealed" invites factual debate over what a reasonable buyer should have seen. The fitness-for-purpose condition in s 14(a) requires the buyer to make known the particular purpose so as to show reliance; courts must therefore dissect negotiations to determine whether reliance existed.

The unpaid-seller remedies have attracted litigation on the duration of transit (s 44). The precise moment at which transit ends when goods reach a destination but the carrier acknowledges holding them for the buyer has been litigated repeatedly. Similarly, what constitutes "insolvency" for stoppage purposes is defined in s A2(3) but its application to modern corporate restructuring remains delicate.

The 2008 bulk-goods reform has itself generated controversy. Section 20A(4)'s proportionate reduction when aggregate shares exceed the bulk, and the deemed consent in s 20A(7), have been criticised for creating unintended priority contests among competing buyers. The saving in s 20A(9) that the section does not impose compensation obligations between buyers leaves shortfalls to be fought out under separate contribution or tracing actions.

Finally, the interaction with consumer-protection legislation has produced jurisdictional tension. While s 54 permits exclusion of implied terms, Commonwealth guarantees cannot be excluded, leading to parallel claims and arguments over whether the state Act's measure of damages (s 52(3)) or the consumer legislation's different remedial regime governs.

Most practitioners assume that ownership passes on delivery; Rule 1 of s 18 provides the opposite — property in specific goods in a deliverable state passes when the contract is made, irrespective of postponed payment or delivery. Consequently risk passes at that moment (s 20) and an unpaid seller must rely on the lien or reservation of title rather than simple retention.

The definition of "merchantable quality" is not statutorily defined; it is left to case-by-case assessment, yet the statute uses the term in ss 14 and 15 without elaboration. Many contracts purport to exclude "all implied terms" but s 14(d) provides that an express warranty or condition does not negative an implied one unless inconsistent; complete exclusion requires explicit negation under s 54 and must survive consumer legislation.

Section 20A(7) deems every co-owner of bulk to have consented to delivery to any other co-owner. A buyer who has paid for 10 % of a 100-tonne bulk is taken to consent to the seller delivering the entire 100 tonnes to another buyer who paid later. The protection in s 20A(8) against causes of action for acting on that deemed consent is powerful but rarely noticed.

The market-overt rule in s 22 still appears on the statute book although market overt has effectively disappeared in modern Australia; a buyer relying on it must prove sale "according to the usage of the market" in a public market.

Auctioneers and sellers frequently overlook s 57(1)(c): if the sale is not notified as subject to seller bidding, any seller bid or employment of a puffer renders the sale fraudulent and treatable as such by the buyer. The "reasonable time" for acceptance or rejection (ss 35, 55) is always a question of fact; there is no statutory safe harbour, yet many businesses treat 30 days as automatic.

Finally, the lien and stoppage rights are lost more easily than commonly realised. Delivery to a carrier without reserving right of disposal ends the lien (s 42(1)(a)); mere obtaining of judgment does not (s 42(2)), but actual or constructive possession by the buyer does. The buyer-in-possession rule in s 25(2) can defeat an unpaid seller's rights if the buyer on-sells to a good-faith third party, unless a security interest is registered under the Goods Securities Act 1986.

Compliance begins with drafting. Every contract for the sale of goods should expressly address when property and risk pass, preferably by reference to the s 18 rules or by positive statement under s 17. Retention-of-title clauses should be drafted to reserve the right of disposal under s 19 and, where possible, registered under the Personal Property Securities Act 2009 (Cth) to preserve priority.

Sellers should identify whether goods are specific or unascertained and, for bulk sales, expressly identify the bulk and record payments to trigger s 20A protections or exclusions. Implied terms should be excluded only by clear language that satisfies s 54 and does not contravene consumer guarantees; a simple "no warranties" clause is insufficient.

Buyers should make known in writing any particular purpose and reliance so as to engage s 14(a). They should inspect promptly and record any rejection within a time that will be judged reasonable under s 55. Where goods are delivered by carrier, buyers should check insurance obligations under s 32(3)-(5).

Unpaid sellers must monitor buyer solvency. To preserve the lien they should avoid unconditional delivery to carriers. Stoppage in transitu requires prompt notice to the carrier before the goods are delivered to the buyer (s 45). Resale after notice must comply with s 47(3) to preserve the damages claim.

Auctioneers must notify any right to bid on behalf of the seller (s 57(1)(d)) and must not accept bids from the seller where no such right is reserved. Wool and sheep-skin contracts must omit draft-allowance clauses (ss 57A, 57B).

Records of all communications, delivery notes, notices of rejection or stoppage, and calculations of reasonable price or damages should be retained. Where bulk goods are involved, parties should maintain running tallies of paid quantities and undivided shares to avoid s 20A(4) proportionate-reduction disputes.

Regular training for commercial staff on the distinction between condition and warranty, the moment risk passes, and the unpaid-seller self-help remedies prevents inadvertent loss of statutory rights. Finally, because the Act preserves common-law rules on misrepresentation and mistake, compliance also requires sound pre-contractual disclosure and accurate description of goods to avoid parallel liability outside the statute.