LEGAL DEFINITION OF MONEY

The Black’s Law Dictionary defines money as a generic term that embraces every description of coin or bank-notes recognized by common consent as a representative of value in effecting exchanges of property or payment of debts. It goes ahead to quote the case of Hopson versus Fountain 5 Humph Tenn. 140 in which the court stated “Money is used in a specific and also in a general and more comprehensive sense. In its specific sense, it means what is coined or stamped by public authority, and has its determinate value fixed by governments. In its more comprehensive and general sense, it means wealth.”

The court in Moss v Hancock ([1899] 2 QB 111, England), in defining money sated;

"Money ... (is) that which passes freely from hand to hand throughout the community in final discharge of debts and full payment for commodities, being accepted equally without reference to the character or credit of the person who offers it and without the intention of the person who receives it to consume it or apply it to any other use than in turn to tender it to others in discharge of debts or payment of commodities."

Similarly, the court in Re Alberta Statutes ([1938] SCR 100) defined money as

"Any medium which by practice fulfills the function of money and which everyone will accept as payment of a debt is money in the ordinary sense of the word even though it may not be legal tender."

LEGAL MEANING OF TRANSFER OF GOODS

The Black’s law dictionary defines transfer as the passing of a thing or of property from one person to another. It is an act of the parties or of the law by which the title to property is conveyed from one person to another.

John Bouvier's 8th edition law dictionary of 1914 defined a transfer as "the act by which the owner of a thing delivers it to another person, with the intent of passing the rights which he has in it to the latter". A mere change of possession does not amount to transfer.

Transfer is only complete when ownership changes from one person to another. While possession is a de facto relationship in which one has the physical control over a good or property, ownership is a de jure relationship that denotes one’s legal control over a good. Transfer is concerned with change of ownership.

Transfer is closely intertwined with the power of control. The question to be asked in determining transfer is, who has control over the good? The point was decided in the taxation case of Estate of Sanford v. Commissioner, 308 US 39 - Supreme Court 1939 where it was held that a gift upon trust, with power in the donor to revoke it is not taxable as a gift because the transfer is incomplete, and that the transfer whether inter vivos or at death becomes complete and taxable only when the power of control is relinquished.

Similarly, according to the court in Burnet v. Chicago Portrait Co., 285 U.S. 1, 16, 20, a transfer is only complete when "the transferor has so parted with dominion and control as to leave in him no power to cause the beneficial title to be revested in himself."

Whether a transfer has been effected and is complete is a question of control over the good. Even where a party purports to have transferred a good to the buyer, the transfer will not be complete if he holds power and control over the good. This is so especially in contracts with a Retention of Title Clause, where property in the goods only vests in the buyer upon the fulfillment of a condition such as full payment of the purchase price. In such contracts, though possession of the goods may change hands from the seller to the buyer, transfer is not complete when the condition is fulfilled and the clause becomes ineffective in the contract.

As the court observed in the case of Burnett versus Guggenheim, 288 U.S. 280, 287, the essence of a transfer is the passage of control over the economic benefits of a good rather than technical changes. The court in Corliss versus Bowers, 281 U.S. 376, 378 was of a similar view when it stated that “retention of control over the disposition of the property……………..renders the transfer incomplete until the power is relinquished……………..”

LEGAL MEANING OF A SELLER

by Mercy Maina,

Section 2 of the Sale of Goods Act, Cap 31 Laws of Kenya defines a seller as a person who sells or agrees to sell goods. The Black’s law dictionary defines a seller as one who sells anything; the party who transfers property in the contract of sale. Section 3 of the Sale of Goods Act, cap 31 Laws of Kenya defines a contract of sale of goods as a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer………… it therefore follows that for a contract of sale of goods to exist there must be a seller who is transferring or agreeing to transfer the property in the goods to a buyer. A seller can therefore be simply defined as the person who transfers or agrees to transfer property in goods to another under a contract of sale.

Who a seller is in a contract will depend on the terms of the contract, in some contracts a seller maybe defined to include his agents, representatives, employees etc. this however does not negate the fact that at the end of the day the seller is the entity or person who has the responsibility to transfer the property in the goods.

To determine who a seller is in a contract, it is therefore prudent to look into who bears the legal obligation to transfer property in the goods. Though it may be done on his behalf by an agent or representatives and though payment for the goods may be received by another on his/its behalf, the seller of goods is the person who is directly obligated to transfer property in the goods as the terms of the contract.

In the case of Geoffrey Munyua v Mombasa Centre Complex & John Felix Kariuki [2014] eKLR, the 1^st Respondent claimed that the agreement of sale subject of this case existed between the Appellant and the 2^nd Respondent as the 1^st Respondent’s company seal had not been used in execution of the contract. The court however found from evidence tendered that the 2^nd Respondent worked for the 1^st Respondent and he executed the contract on behalf of the 1^st Respondent. The court found that the contract existed as between the Appellant and the 1^st Respondent as the 2^nd Respondent was merely an agent of the 1^st Respondent. In reaching this conclusion the court relied on section 38 of the Companies Act which states that

“a document or proceeding requiring authentication by a company may be signed by a director, secretary or other authorized officer of the company, and need not be under its common seal.”

The general rule is that where a person contracts as agent for a principal, the contract is the contract of the principal and not that of the agent so that, the only person who may sue or be sued and to whom all rights and obligations in the contract vest is the principal and not the agent as was held in Montgomerie versus United Kingdom Mutual Steamship Association (1891) 1QB 370.

A seller is therefore in whom the obligation to ensure a transfer of the property to the buyer vests. All others whether agents, representatives or employees simply act on behalf of the seller and cannot therefore are deemed to be the seller. Similarly, even in contracts where parties get into a contract upon the introduction of another party, the third party falls out of the contract and the only parties existing as seller and buyer is the supplier of the goods (seller) and the consumer (buyer).

LEGAL DEFINITION OF A BUYER

by Mercy Maina,

A buyer is a person who buys or agrees to buy goods. To buy is simply to agree to have the property in a good transferred to you pursuant to a contract. In determining who a buyer is in a contract, regard must be had to the terms of the contract. The terms of the contract should show the intention of the parties as to who was meant to supply goods (seller) and who was meant to receive supply of those goods (buyer).

In the case of John Nderebe Kahuthia t/a Kirurumo Filling Station v Jaribu Farmers Co-operative Society Ltd [2016] eKLR the court observed that a contract can only exist between the supplier and the consumer. Payment may be made by the consumer or another third party on behalf of the consumer but that cannot be implied as giving rise to a contract between the supplier and the third party. The contract will still be between the supplier and the consumer.

In the case of John Nderebe Kahuthia t/a Kirurumo Filling Station v Jaribu Farmers Co-operative Society Ltd [2016] eKLR the issue of who a buyer was in a contract arose out of an agreement which was evidenced by a letter which read in part;

“Please issue fuel worth 3,500/= daily to  Jaribu Farmers Co-operative Society. They have been contracted by NKCC to transport milk for Passenga Scheme and Siranga Scheme.  Payments will be made monthly by themselves on payment of their milk transport dues.

Yours faithfully

For New KCC LTD

The Respondents denied the existence of the contract claiming that the contract existed between the appellant as the seller and NKCC as the buyer. The court held that as per the wording of the letter, the supplier of fuel was the Appellant while the consumer was the Respondents. In that regard the court concluded that the Respondent was the buyer.

In determining who a buyer is, the court will give regard to the wording of a contract. As was stated in Jiwaji & Others -vs- Jiwaji & Another (1968) EA 547:

“--- where there is no ambiguity in an agreement it must be construed according to the clear words actually used by the parties, and it would be wrong to adopt a different construction or to imply a term to contrary effect. --- I think I am not entitled to put into the instrument something which I did not find there in order.”

Therefore, who a buyer is in a contract will largely depend on the intention of the parties as expressed in the terms of their agreement. The easy and quick way to discover who a buyer is in a contract is to evaluate who is receiving the goods. Even if the goods are received on his behalf by a third party or payment made by a third party on his behalf. The buyer will still be the person who the parties intended to supply the goods to.