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Parties:

Buyer

Seller

Applies to:

The purchase of personal belongings, i.e. things that are detachable and movable, such as a mobile home, a painting, a piano, a car, furniture etc.

The purchase of services such as a contract for the repair of a car or painting of a house, legal counselling or a visit to the dentist.

Order purchases, i.e. ordering goods that have yet to be manufactured, such as a wedding dress.

Does not apply to:

The purchase of real property

International trading

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In the act, a distinction is made between rules regarding:

Consumer- and commercial sale

Sale of generic goods and sale of specific goods

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B2B - when sales are in connection with businesses

If purchased goods are made primarily with a commercial interest rather than a private, it is considered a commercial sale, e.g. an electrition buying a power drill for his business.

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B2C - Sales between a private individual and a business

The goods must primarily be used for private purposes.

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C2C - sale between two private individuals

C2B - sale from a private individual to a business

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Sale of Generic Goods or Sale of specific goods?

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Sale of Generic Goods or Sale of specific goods?

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Two types of goods:

Generic goods

A sale of a specific type of goods (§3 of the Sale of Goods Act)

Generic goods are items where the seller has the choice to pick from a batch to complete a sale. E.g. if you order 2 tons of strawberries from a farm, the farmer can choose any 2 tons from their total harvest to send to you. Likewise, if you want to buy 4 green chairs from a furniture store, the seller can select any 4 chairs they have in stock to fulfill your order.

Allows sellers to use their existing inventory efficiently to meet orders.

Specific goods

The seller has no freedom of choice, the buyer has the say on which individual good they want.

A very specific item, and the seller is bound to provide this specific product. An individually identified item, which is the only one of its kind, e.g. a work of art.

It can also be a specific good if the buyer has selected it, e.g. if a store displays 25 of the same chair, but the buyer decides they want a specific one.

Can also be cases where the buyer buys an entire batch of goods, for example the entirety of one farms strawberry harvest. If the strawberry's rots, the seller can not replace the good and therefore has no freedom of choice.

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When a buyer enters into a purchase agreement with a seller, the buyer commits themselves to deliver their considerations, when the goods have been delivered:

The obligations of the buyer are:

Paying the purchase price:

On time

With the right means of payment

At the right place

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The buyer and the seller have entered a bilateral contract, and thus they have committed to deliver what was agreed upon.

If one of the parties does not fulfill their obligations, it is considered a breach, and according to the Sales of goods Act the disappointed party has remedies for the breach of the contract.

The obligations of the seller are to deliver what was sold:

At the right time

At the right place

In the right condition

With the right rights

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Presumption of concurrent consideration 

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Presumption of concurrent consideration 

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The buyer must pay the seller the purchase price, once the goods are delivered. This means a concurrent exchange of conderations, goods and money, takes place, and in this case it is considered a cash sale.

Although cash sales do not mean the goods are paid in cash

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Non-mandatory - The rules regarding commercial sale

Can be disregarded if the parties agree on other terms than the rules in the act.

If no agreement has been made, the parties will follow the rules in the act

B2B and C2C

Safeguard mandatory - The rules regarding consumer sale (§72-87 of the Sale of Goods Act)

The consumer is the weaker party, and the rules are in this case in place to protect them.

The rules are safeguard mandatory, meaning that they can only be derogated from if it is in the interest of the weaker party.

B2C and C2B

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If the buyer and the seller has agreed for the buyer to pay at a later stage, this is considered credit. This means that the seller hasn't received payment, despite the goods having been delivered.

The goods are delivered without the seller being paid for at the same time.

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The buyer must pay the seller at the right place, meaning the agreed place of payment. This can be e.g., the seller's business address, the right bank account, or a giro payment number.

The right place of payment will be written in the mutual agreement between the buyer and seller.

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In a purchase agreement, the purchase price is the amount the buyer must pay the seller, once the goods are delivered. This amount can either be agreed upon or not. Resulting in one of the 2 cases below

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If the purchase price has been agreed upon, it will be written in the mutual agreement between the seller and buyer. Thus, the buyer will have to pay the seller the agreed price

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If the purchase price has not been agreed upon, the buyer must pay the price, the seller asks for, unless it is unreasonable (cf. section 5 of the Sale of Goods Act).

If the buyer does not want to pay the seller the price the seller want, the buyer can protest.

If the buyer remains passive, they may risks having to pay the sellers desired price

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The seller is obligated to deliver the goods to the buyer i.e. meaning the seller must perform the actions that will enable the buyer to have possession of the goods.

What is considered a delivery?

If nothing else has been agreed between buyer and seller, the goods are considered delivered when the seller has performed the actions that enable the buyers to take possession of the goods.

If delivery has happened, and the goods are later damaged or lost by an accident, the risk has been passed to the buyer, and the seller can demand payment, even though the goods are damages or does not exist.

If the delivery has not happened, the risk have not been passes to the buyer. This means the seller cannot demand payment for the goods, and the buyer can demand a new delivery.

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Examples of delivery and passing of the risk

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Examples of delivery and passing of the risk

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The delivery has been made, and the risk has been passed over:

A business called Tech A/S sells 50 computer screens to another business called Banka A/S. Tech A/S packed the screens and distribute the order through PostNord. When PostNord receives the order, the risk is passed to the buyer, as Tech A/S did everything in order to enable Banka A/S to have possession of the computer screens.

The delivery has not been made, and the risk has not been passed over:

A business called Tech A/S sells 50 computer screens to another business called Banka A/S. Tech A/S has packed the screens, but unfortunately they drop the order in their own warehouse, and 20 screens were broken. The package has not been delivered to PostNord in the right condition, as it was dropped before delivery, and a passing of risk has therefore not happened. In this case, the seller Tech A/S cannot demand payment.

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There can also be prepayment plans between the buyer and seller. This means the buyer pays beforehand of recieving the goods. Thus, the seller is paid for, before having delivered the goods.

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It is important to know when delivery has taken place:

The passing of risk

Time of delivery is important in the assessment of wether or not a order is delayed (a breach of contract)

The objects must be without defects at the time of delivery (breach of contract)

When delivery has occurred the seller can demand payment.

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If there is not agreed time of payment between the buyer and seller, the buyer must pay the seller on the seller's demand. (cf. section 12 of the Sale of Goods Act.)

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The seller must deliver the product on time.

A time can be a specific date, period or time examples:

Mid January (11th - 20th of January)

Valentines day - the 14th exactly

11 o'clock on the 21st

If only a date has been agreed, the delivery must happen within business hours.

If the parties have not agreed upon a time fo delivery, it must happen on the buyers demands, meaning when the buyer wants his/hers goods delivered. The seller must ensure the goods are delivered within a reasonable timeframe.

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The buyer must follow and respects the seller's choice regarding the right means of payment. For instance if the seller wants payment to happen in cash, via e-bank, payment with an inpayment form, etc. The buyer has to pay, how the seller asks. The buyer cannot choose to pay differently.

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If the buyer does not meet the obligations

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If the buyer does not meet the obligations

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If the buyer does not keep his obligations, i.e. breaching his contract, the seller is given remedies. The Sale of Goods Act gives the seller a number of courses of actions.

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The seller must deliver in the right condition

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The seller must deliver in the right condition

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If it is a sale of generic goods, the seller is obligated to deliver the agreed quantity, and if it is a sale of specific goods the seller must deliver exactly the goods that have been agreed on

Seller is also obligated to deliver the goods in the expected quality.

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If the buyer and the seller have not agreed on a place of delivery, the general rule is that the buyer will have to pick the goods up himself at the seller's place of business.

Passing the risk

The risk is passed on to the buyer in two different scenarios:

A: The buyer picks up the good, and physically have the good

B: The agreed pickup time is exceeded.

If the buyer does not pick up the goods at the agreed time, and the good is still at the seller's storage facilities, the risk passes to the buyer anyway.

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In general, a seller can demand payment once the risk has transferred to the buyer and if something happens to the product afterward. For example, if I purchase a unique soda from a vintage store and fail to pick it up at the agreed time, the seller can still demand payment if the store is subsequently robbed.

However, there is an exception if the seller cannot specifically identify the item as belonging to the buyer. For instance, if I purchase a sofa from IKEA and the store is robbed, losing 500 of its 550 sofas, IKEA cannot determine whether my specific sofa was stolen. In such cases, despite the risk having transferred to me and the pickup time being exceeded, IKEA would need to provide a replacement sofa.

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If the parties have not agreed on a place of delivery, sections 9-11 of the Sale of Goods Act apply. The sections differentiate between spot trades and long distance sales.

spot trades - delivery happens within the business' geographical area

Long distance sales - goods being sent a significant distance

Spot trades can be:

Cash-and-carry purchases

Delivery sales

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Wit delivery sales the seller usually brings the goods to the buyer, within the geographical area of the seller. Usually carried out by the seller's employee(s).

Delivery and the passing of risk happens when the buyer has taken possession of the goods, cf. section 11 of the Sale of Goods Act.

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The buyer and the seller can agree on when the risk passes from the seller to the buyer and who is to pay the shipping costs if they make use of the provisos from the Sale of Goods Act

We distinguish between 2 types of provisos:

Transportation proviso

Cost proviso

Overview of the diffrent provisos from the Sales of Goods Act:

FOR

Franco

CFR

CIF