Goods delivered with no agreed price: reasonable price (Sale of Goods Act 1979 s.8)
Oakmere Garden Centre Ltd telephoned Hollins Timber Ltd and ordered 200 fence panels for delivery the following week. Nothing was said about price, and the two companies had never traded before. Hollins delivered the panels and Oakmere has sold most of them. Hollins has now invoiced Oakmere at its own list price, which is well above the usual market price. Oakmere argues there was never a binding contract because the price was not agreed.
Which of the following best describes Oakmere's liability under the Sale of Goods Act 1979?
Choose one answer to see the reasoning.
Worked answer
Correct answer C: Oakmere must pay a reasonable price for the panels, because the price was not fixed by the contract, an agreed method, or a course of dealing.
THE RULE TO REMEMBER
Where the price of goods is not fixed by the contract, by an agreed mechanism or by a course of dealing, the buyer must pay a reasonable price (SGA 1979 s.8(2)).
Goods delivered with no agreed price: reasonable price (Sale of Goods Act 1979 s.8)
Under s.8(1) of the Sale of Goods Act 1979 the price in a contract of sale may be fixed by the contract, left to be fixed in a manner agreed by the contract, or determined by the course of dealing between the parties. Section 8(2) provides that where the price is not determined in any of those ways, the buyer must pay a reasonable price. What is reasonable is a question of fact (s.8(3)). Here the parties agreed the goods and the delivery, the goods were delivered and largely resold, and the price was simply not discussed. There was no previous dealing to fix it. The contract is not void for uncertainty; the statute fills the gap. Oakmere must pay a reasonable price, not Hollins's list price if that is above what is reasonable.
Why A is wrong: Section 8(2) supplies a reasonable price where none is determined, so the absence of an agreed price does not prevent a contract here.
Why B is wrong: A seller's list price applies only if the contract fixes it or it is otherwise agreed; absent that, s.8(2) requires a reasonable price.
Why D is wrong: The Act does not let the buyer fix the price; the test is an objective reasonable price, decided as a question of fact.
Why E is wrong: Section 8(2) requires a reasonable price for the goods sold; it does not take the market price at the date of trial.
A little more practice done.
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A GOOD HABIT, DELIVERED
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