Question

1.2 Discuss the various modes of delivery (contract of sale) (10 marks) 1.3 Differentiate between suspensive and resolutive condition (5 marks)

Answer 1

Modes of Delivery of goods

Delivery of goods may be made in any of the following three ways:

1. Actual Delivery: Also known as physical delivery, actual delivery takes place when the goods are physically handed over by the seller or his/her authorized agent to the buyer or his/her agent authorized to take possession of the goods.

For example, A, the seller of a car hands it over to B, the buyer; it is a case of actual delivery of the goods.

2. Symbolic Delivery: Where the goods are bulky and heavy and it is not possible to physically hand them over to the buyer, delivery thereof may be made by indicating or giving a symbol. Here the goods itself are not delivered, but the means of obtaining possession of goods is delivered.

For example, delivering the keys of the warehouse where the goods are stored, or the keys of a purchased car to its buyer, bill of lading which will entitle the holder to receive the goods on arrival of the ship.

3. Constructive Delivery: It may be defined as delivery when the third person in possession of the goods acknowledges holding it on the behalf of buyer. Sometimes at the time of sale, goods are in the possession of third person (a bailee, such as godown keeper) who acknowledges the buyer that he holds the goods on buyers behalf. Then it is said to be constructive delivery.

Constructive delivery may be effected in the following three ways.

• Where the seller of the goods agrees to hold goods on behalf of buyer
• Where the buyer holds the goods and seller agrees that buyer holding the goods is owner
• Where a third person holding goods acknowledges the buyer that he hold goods on buyers behalf

Suspensive Condition:

A suspensive condition suspends the rights and obligations under a contract until the condition is fulfilled. Once the condition is fulfilled the contract is deemed to have been in force from the effective date, not from the date of the fulfilment of the suspensive condition.

However, if the suspensive condition is not fulfilled, then no binding contract between the parties comes into existence. This is not remedied by either party performing in terms of the contract.

An example of a suspensive condition would be as follows:

“Mr A must provide proof that he has resigned as a director by 15 March 2019 or such later date as may be agreed between the parties”.

Resolutive Condition:

When dealing with a resolutive condition, the contract is immediately binding with all rights and obligations coming into existence from day one of the contract and there is no suspension of these rights and obligations. Unlike a suspensive condition, if a resolutive condition is fulfilled, it would have the effect of terminating the contract with retrospect between the parties and the operation of the rights and obligations between the parties would immediately cease to exist. The parties would then need to be restored to their pre-contractual state, which is often complicated as this may for example require the unbundling of a complicated transaction. In this instance it may be better suited, to avoid such unbundling, to make use of a suspensive condition as opposed to a resolutive condition.

An example of a resolutive condition would be as follows:

“In the event Mr A does not provide proof that he has resigned as a director of ABC Company by 15 March 2019 the contract will be deemed to be cancelled and be of no force or effect”