CHAPTER I. CONTRACTS OF CONDITIONAL SALE. Conditional Sale Defined.-A conditional sale of a chattel is a sale in which the transfer of title to the thing sold, or the purchaser's right to retain the thing sold, is made dependent upon the performance of a condition. It is a sale the binding effect of which, notwithstanding delivery of the thing sold, is made to depend on due payment, or other performance, by the buyer, so that meanwhile the title or ownership is not vested in him (1). Nature of Conditional Sale. A sale of goods by sample with an agreement that they may be exchanged if inferior, is, in the wider sense of the term, a conditional sale (2). So also is an agreement for the purchase of furniture on the "hire system," whereby the owner of the goods leases them on the terms that they shall become the property of the hirer, when certain instalments have been paid, and reserves the title and property in the goods until that has been done, with liberty to seize them on default of the hirer to pay any instalment (3). Contracts of conditional sale, when free from any fraudulent intent, are not repugnant to any principle of justice or equity, even though possession of the property be given to the proposed purchaser. The intent of the parties will be recognized, and sanctioned, where it is not contrary to the policy of the law. (1) Century Dict. (2) Fisher v. Merwin 1 Daly N.Y. 234. (3) Exp. Crawcour 9 Ch. D. 419. Where no fraud is intended, but the honest purpose of the parties is that the vendee shall not have the ownership of the goods until he has paid for them, there is no general principle of law to prevent the purpose of the parties from having effect (4). If the hiring agreement, although it reserves the property in the goods, provides that the hiring shall continue until the whole purchase price is paid in rentals, or otherwise compels the hirer to carry out the purchase, the contract is an "agreement to buy" the goods (5), but if the hirer is empowered to terminate the hiring at any time by delivering up the chattel without being liable for any further payments beyond the sums then due, then the contract is not an agreement to buy (6). Where M. agreed to manufacture and furnish to the joint account of himself and K. a quantity of staves to be loaded in cars at a railway station by a day named, and by the terms of the agreement the staves were to be considered at all times, whether marked or not, the property of K. as security for advances, it was held that the staves became K.'s property as soon as made, and never were the property of M. nor subject to seizure at the instance of M.'s creditors (7). And where crude oil was consigned to a refiner on the express agreement that no property in the oil should pass until he made certain payments, and the refiner sold the oil before making such payments and without the knowledge of the true owner, it was held that, although such subsequent purchasers were purchasers for value from the refiner in the belief that he (4) Harkness v. Russell 118 U.S. 663. (5) Hull Ropes Co. v. Adams (1895) 65 L.J. Q.B. 114; Lee v. Butler (1893) 2 Q.B. 318; Thompson v. Veale 73 L.T. (Eng.) 130. (6) Helby v. Matthews (1895) A.C. 471. (7) Kelsey v. Rogers 32 U.C.C.P. 624. was the owner and entitled to sell the oil, the true owner was entitled to recover the price of the oil from them, he having retained the property in the oil, and not having done anything to estop him from maintaining his right of ownership, and the refiner not having been entrusted with the goods to sell or deal with them (8). Frequently the evidence of the conditional sale is an order signed by the vendee obtained on the solicitation of the vendor's agent, and containing stipulations reserving the right of property to the vendors, with a power to retake possession upon default either in the payment of the price or of certain instalments thereof, or in regard to other provisos calculated to ensure the proper care and protection of the chattel sold. If the order for the article which is the subject of a proposed conditional sale provides that the same is not binding on the company to which it is addressed and by whose agent it is obtained, until received and ratified by the company, it remains open for the company's acceptance for a reasonable time unless it is withdrawn by the party signing it, and when that reasonable time has elapsed, without any notice of its acceptance having been given to him, the party ordering is entitled to assume that the company do not intend to accept it, and he need not notify it of his with drawal of same (9). The seller in a conditional contract of sale under which the buyer was permitted to sell the goods in course of trade and use the proceeds in the purchase of other goods for his stock will, however, acquire no title to the latter goods so purchased (10). (8) Forristal v. McDonald (1883) 9 Can. S.C.R. 12. |