Introduction

There is usually an exclusion clause, "goods sold are not returnable" written in front of the counter in many shops or boldly printed on sales invoices and receipts. However, the meaning and/or effect of this exclusion clause remains a mystery to shoppers and buyers. What this article seeks to do is provide an understanding of this exclusion clause, the circumstances for its applicability, the applicable laws and whether the goods sold are indeed not returnable.

This exclusion clause simply means, once payment for goods are made, any exchange or refund on the goods is not allowed, even if the goods are found to be defective. Such exclusion clauses are used by shops/sellers to prevent buyers from returning goods purchased and/or obtain refund of the purchase price.

In actual fact, anytime goods are purchased from a seller, a contract is being made with the seller. Ordinarily, any issue regarding defects in the goods should be addressed by the seller within a reasonable time. However, this is not the case due to the exclusion clause bodly displayed on counters or printed on sales invoices and receipts.

Applicable law

In Ghana, there is no law that proves this statement "goods sold are not returnable". The Sale of Goods Act, 1962 (Act 137) (the "Sale of Goods Act") provides under section 8 that, the seller's fundamental obligation is to deliver specific goods or goods substantially corresponding to the description or sample by which they were sold to the buyer.

Where the seller is in breach of this fundamental obligation, the buyer may reject the goods and in addition, maintain an action against the seller for damages for the breach. Under section 55 of the Sale of Goods Act, the measure of damages is the loss which could reasonably have been foreseen by the seller at the time when the contract was made, as likely to result from the breach of the fundamental obligation.

Judicial illustrations

Where, there is a breach of the seller's obligation to deliver specific goods or goods substantially corresponding to the description or sample to the buyer, the measure of damages is premised on the loss which could reasonably have been foreseen by the seller at the time when the contract was made.

In Tawiah v. Ghana Civil Aviation Authority & Ors [1989-90] 1 GLR 452-456, the buyer purchased the seller's old and unserviceable storage tank at a public auction for ¢16,000. Four days later, he approached the seller with a view to collecting the tank but the seller refused to deliver it on the pretext that the Ministry of Health had requested that the tank be released to Pantang Hospital to satisfy a national need.

The buyer was not satisfied with the explanation and therefore instituted an action against the seller for damages for breach of contract. The seller stated the reason above for its inability to deliver the tank. Evidence was led to show the cost of a new tank and that of an old one at the time of the trial. The trial judge found that for its age and after rehabilitation, a similar tank could cost the buyer ¢600,000 at the current price. The court held that for non-delivery of goods to the buyer or for a breach of the seller's fundamental obligation to deliver specific goods to the buyer, the measure of damages was the loss which could reasonably have been foreseen by the seller at the time when the contract was made as likely to result from the breach of contract.

The Sale of Goods Act also provides under section 13 that:

(1) The goods sold must be free of defects which are not declared or known to the buyer unless the buyer has examined the goods in respect of defects which should have been revealed by examination; and

(2) The goods should be fit for their intended purpose if supplied by the seller and the buyer expressly or by implication makes known the purpose for which the goods are required.

Under the Sale of Goods Act, the buyer may not reject the goods which he has accepted. The buyer is deemed to have accepted the goods if he does not, within a reasonable time after delivery or acceptance of the goods, inform the seller that he rejects the goods.

Time therefore, is a material consideration where a buyer seeks to repudiate a contract or reject goods delivered to him. This is because time helps to determine whether the buyer has obtained full ownership of the goods or whether the buyer has accepted the goods. On the other hand, what is a reasonable time is a question of fact which varies with the circumstances of each case.

In the case of Rockson v. Armah (1975) 2 GLR 116-121, the seller sold a second-hand Mercedes Benz car to the buyer for ¢3,200. The buyer made cash payments of ¢2,200 and remitted two post-dated cheques of ¢500 each for the balance of the purchase price. Upon delivery, the car was found to have been involved in an accident and suffered considerable damage. The seller accepted liability and agreed to repair the car. Consequently, the seller approached Messrs. R. T. Briscoe to effect the repairs but found their estimates too high. The car was eventually repaired by a "wayside" fitter in a day and the buyer took delivery.

However, after the buyer had used the car for almost two months he repudiated the contract on the ground that he had discovered some latent defects in the car. The learned trial judge held that the buyer was justified in repudiating the contract.

On appeal against this decision, the main issue for the consideration of the court revolved around the right of a purchaser to repudiate a sale upon the discovery of latent defects. In giving judgment for the seller, the court held that, time was a material element for consideration in a contract of sale, since it was an element in the determination of the question whether the buyer has obtained ownership (and not possession) of the goods. A long period of possession can be equated with acceptance, ownership of the goods and the assumption of all risks.

In effect, any undue delay by the buyer in rejection of the defective goods amounts to a positive assumption that the buyer has ownership of the goods and therefore, cannot reject the goods.

If the defects in the goods are brought to the notice of the buyer before or at the time of purchase, and the buyer still purchases the goods, he cannot reject the goods because he purchased the goods at his own risk.

It is instructive to note that, if an item is bought from a shop and the next day the buyer regrets spending so much money, or simply does not like the item in the morning, the item cannot be returned simply because there has been a change of heart or mind. The seller is not obliged to accept such goods if returned by the buyer.

Other legislative intervention

Government has initiated the process of enacting a consumer protection law to enhance confidence and strengthen consumer protection. The proposed law will establish a Consumer Protection Authority to oversee all issues relating to consumer protection. In addition, the proposed law will address the display or inscription of the exclusion clause.

Conclusion

Goods sold are returnable when the goods are found to be defective or unfit for their intended purpose unless the defects could have been detected upon reasonable examination of the goods by the buyer. It must be emphasized that, return of the defective goods must be done within a reasonable time.

Where there are no defects with the goods, yet the buyer decides that he no longer requires the goods, the seller is not obliged to accept the goods if returned by the buyer.


Daniel Imadi Esq.is a lawyer and an associate in the Business & Industry practice group at Bentsi-Enchill, Letsa and Ankomah in Accra. He can be contacted via dimadi@belonline.org