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Part I Sales Law: Development and Modern Practice, 2 Development of Domestic Sales Laws

From: Global Sales and Contract Law (2nd Edition)

Ingeborg Schwenzer, Edgardo Muñoz

From: Oxford Legal Research Library (http://olrl.ouplaw.com). (c) Oxford University Press, 2023. All Rights Reserved. Subscriber: null; date: 06 June 2023

Applicable law — Rome Convention — Rome I Regulation and choice of law

(p. 7) Development of Domestic Sales Laws

(p. 8) A.  General

2.01  No comparative work on sales and contract law can dispense with providing at least a brief overview on the historical development of domestic sales and contract law.

B.  Roman Law

I.  General

2.02  Roman law is the foundation on which Continental European legal systems like France, Germany, Italy, Spain, and those legal systems influenced by them in Eastern Europe and Central Asia, East Asia, Ibero-America, and Africa, have been built.1 But as of today the impact of Roman law even on Anglo-American and Scandinavian law is considered to have been a lot stronger than originally assumed.2 It is therefore not surprising that numerous legal mechanisms and solutions have survived in practice and then found their way into civil codes and statutes.3

2.03  Roman law has brought forth famous legal sources such as the Twelve Tables from around 450 bc and the Corpus Iuris Civilis from 533 and 534 ad. The decline of the Roman Empire starting in the third century ad, turned Roman law into what has become known as vulgar law. The classic methods of legal thinking and terminological techniques were abandoned and the law was left to laymen or just slightly educated legal professionals.4 Nevertheless, with the survival of vulgar law basic Roman law was preserved in Western Europe.5 By the end of the eleventh century the Corpus Iuris Civilis was thoroughly examined in Italy. In the following centuries the rediscovered Roman law found its way into the European legal systems where it combined with the existing laws.

II.  Roman Sales Law

2.04  Under Roman sales law contracts for the sale of goods could be concluded without any formal requirements and with almost no restrictions as to the object of the contract.6 However, the contract was null and void due to initial impossibility where the goods to be sold had ceased to exist before the conclusion of the contract.7 In cases where the goods did not yet exist, a contract of sale only became effective if the goods later came into existence;8 the contract was then given retroactive effect.9

2.05  Generally speaking, Roman sales law was based on the sale of specific goods. The sale of unascertained goods as such was unknown even though stockpiling purchase was accepted.10 The sale of goods was generally understood to be a cash sale and, naturally, the goods to be sold had to be determined at the time of the conclusion of the contract.11 The purchase price had to (p. 9) consist of a determined or at least determinable sum of money. The purchase price further had to be meant seriously but did not have to be just.12

2.06  The Corpus Iuris Civilis generally placed the risk of loss with the buyer at that point in time where the contract was perfected.13 In case of stockpiling, purchase risk passed upon the separation of the goods from the stock.14

2.07  Under Roman law the seller was obliged to deliver the goods which had to be free from any right of the seller itself or third parties. Yet, the seller’s obligation was not the transfer of title15 which occurred with the handing over of the goods (traditio), if the seller was the owner.16 The seller, however, was liable in situations where third parties successfully claimed possession of the goods sold to the buyer and the buyer was then evicted.

2.08  Naturally, neither the category of impossibility nor that of delay directly deals with defective goods. This is due to the fact that, at first, this was only of significance where pieces of land had been sold.17 As the basic Roman concept for the sale of movable goods was that of cash sale, the goods sold were usually physically present to both parties.18 In the typical scenario the buyer therefore had the chance to see the goods before entering into the sales contract. Hence, liability for defective (movable) goods never became a general category comparable to ‘impossibility’ and ‘delay’. According to the classic Roman law the seller was only liable if it had given a special guarantee (stipulation) or if it had acted fraudulently (dolus).

2.09  However, in the field of slave and cattle trade—economically the most important markets at that time—two remedies for the buyer in case of defects were developed, the actio redhibitoria and the actio quanti minoris. For a period of six months the former entitled the buyer to the unwinding of the contract and the latter allowed a reduction of the purchase price.19 A claim for damages additionally required fault on the side of the seller. Although these rules were originally designed specifically for the trade of slaves, Iustinian later applied them to all sales of goods.20

2.10  With respect to defects in title, Roman law did not accept the acquisition of ownership in good faith.21 Therefore, where the buyer was sued by a third party, the buyer had an action against the seller who then had to defend it against the third party claim (actio auctoritate).22 If the third party succeeded, the seller was liable to the buyer for a sum that equalled double the purchase price. The actio auctoritate was, however, limited to cases where a res mancipi (p. 10) (land, slaves, certain types of cattle, rights as to the use of another’s property)23 had been sold. Nevertheless, in all other cases it had become common practice for buyers to stipulate the payment of the double purchase price (stipulatio)24 in case the goods delivered had a defect in title.25 If neither of these actions was available to the buyer, it could still resort to the actio empti if the seller had known of the third party right but not informed the buyer.26

C.  Common Law

I.  General

2.11  The common law is generally understood to have begun during the reign of King Henry II of England (1154–89),27 although some have dated it to 1066 and the arrival of William the Conqueror.28 Notably Henry’s reforms consisted of issuing writs. Each type of writ specified a particular cause of action and the remedy. Petitioners had to choose the writ that most accurately reflected their grievance. If the court agreed, the remedy was granted. ‘The compilation and reconciliation of the customary laws of England’s individual counties and localities instituted by Henry II formed a legal structure truly common to all Englishmen’.29 The very name the ‘common law’ signifies its ambition to be what in modern parlance would be described as uniform law.

2.12  The common law continued to develop across all areas of law without distinction. The doctrine of precedence, or stare decisis et non quieta movere is a relatively modern development. To operate as it is understood today, the doctrine of precedent requires a hierarchical court structure and a reliable system of reporting judgments. It has been suggested that a genuine court structure was not settled in England until the mid nineteenth century.30 The reporting system, in England at least, can be traced back to the thirteenth century and the Year Books.31 However these early reports could not be described as reliable; indeed they were not relied upon.32 It was not until the 1600s that law reports, akin to those of today, were printed and made available to judges and lawyers in regular practice.33

II.  The English Model

1.  General

2.13  Statutory developments in the sale of goods throughout the common law world have been well documented.34 The first earnest attempt to describe and codify the relevant common law principles was undertaken by Sir Mackenzie Chalmers. When the Sale of Goods Bill 1888 (No 267) was introduced to the House of the Lords an accompanying memorandum from (p. 11) Chalmers claimed it was ‘almost entirely a reproduction of the common law’.35 The original bill failed to pass but was reintroduced and became the Sale of Goods Act 1893 (UK).36 Its subsequent adoption throughout the British Empire was thorough and swift.37

2.  Adoption in Other Jurisdictions

2.14  In the present work, common law is often summarized by reference to the USA and those jurisdictions following the English model. The latter phrasing gives expression to the fact that English law and, for present purposes, in particular the sale of goods legislation today is still similar in legal systems with a common law tradition in different regions of the world. This is true for English-speaking countries such as Australia, Canada, and New Zealand but also for the East Asian common law jurisdictions: Hong Kong, India, Malaysia, Pakistan, and Singapore. As far as specific sales law is concerned, all of these legal systems closely follow the English model in that the respective sale of goods Acts do not display substantial differences. Nevertheless, some significant subsequent changes in England have not been followed. Prominent examples include the change in the definition of specific goods and the inclusion of an undivided share into that definition.38 This change has only been followed in Singapore.39 Another example is that the English Sale of Goods Act no longer speaks of an implied condition of merchantable condition but of an implied term of satisfactory quality,40 a change which again only Singapore has followed.41

3.  Modifications of the Basic Model

2.15  However, those common law legal systems following the English model do not indiscriminately do so. Apart from the changes to the English Sale of Goods Act which were not followed in almost all of these jurisdictions, the most striking difference exists in the area of general contract law which inter alia comprises formation of sales contracts. Under English law, and most of its followers, general contract law is still judge-made common law. However, India and Pakistan have enacted separate contracts Acts at a relatively early point in time.42 This approach was later followed by Malaysia43 and some sub-Saharan common law jurisdictions.44 Some of the last-mentioned systems, however, repealed their contracts Acts and returned to English common law.45

III.  The United States of America

1.  General

2.16  Although the United States of America obtained its independence from the United Kingdom nearly 100 years earlier, it too took its lead from the British legislation.46 The reasons for doing (p. 12) so appear to have been pragmatic and mindful of what were even then perceived to be benefits of uniform law. Samuel Williston drafted the Uniform Sales Act 1906 (US) based on the English Sale of Goods Act 1893 and has been described as ‘the maker