Lacey pays the balance owing on each microwave on 60 days credit. Lacey delivers the microwave to the customer using its own van and driver.
When a demonstration model has been in the shop for some time, Lacey sells it off at a knock-down price and, at that stage, the price becomes payable to Micro-Maker. Micro-Maker is concerned that the volume of business has grown considerably since the start of the relationship and feels that it might be appropriate to formalize the contractual arrangements. They want to adopt a standard form contract and ask you for advice.
Applying the Sale of Goods Act of 1979, the following legal rules are necessary for the ascertaining of ownership of goods regarding a contract agreement between Micro-maker, a small manufacturer of microwaves and Lacey, a chain of departmental stores.
1. Rule 1.—Where there is an unconditional contract for the sale of Microwave ovens between Micro-maker and Lacey, the property in the microwave ovens passes to Lacey when the contract is made, and it is immaterial whether the time of payment or the time of delivery or both, be postponed.
2. Rule 2.—Where there is a contract for the sale of microwave ovens between Micro-maker and Lacey, and the Micro-maker is bound to do something to the microwave ovens for the purpose of putting them into a deliverable state, the property does not pass until the thing is done and Lacey has noticed that it has been done.
3. Rule 3.—Where there is . . contract for the sale of microwave ovens between Micro-maker and Lacey in a deliverable state but the Micro-maker is bound to weigh, measure, test, or do some other act or thing with reference to the microwave ovens for the purpose of ascertaining the price, the property does not pass until the act or thing is done and the Lacey has noticed that it has been done.