Table of Contents

Pages

PART ONE: LAW OF SALES......................................................................................... 1

Chapter One Introduction........................................................................................ ...........1

1.1. Subject matter of law of sales.................................................................................... 2

1.1.1 Existing goods…………………………………………………………………... 3

1.1.2 Goods belonging to third party…………………………………………………. 3

1.1.3. Future goods…………………………………………………………………… 4

1.1.4. Contingent goods………………………………………………………………. 4

1.2. Function and scope of law of sales............................................................................. 6

1.3. Summary……………………………………………………………………………. 11

1.4. Review Questions…………………………………………………………………... 11

Chapter Two Contract for Sales of goods......................................................... ..............13

2.1. Definition, formation, and other affiliated issues

in the contract for sales of movables.......................................................................... 13

2.1.1 General definition of contract of sales………………………………………….. 14

2.1.2. Definition of contract of sales in Ethiopia……………………………………... 15

2.1.2.1. It is Contract............................................................................................... 17

2.1.2.2. Two Parties………………………………………………………………. 18

2.1.2.3. Delivery and Transfer of ownership……………………………………... 19

2.1.2.4. The Thing…………………………………………………………………. 19

2.1.2.5. The Price………………………………………………………………….. 20

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 2.1.3. Formation of contract of sales............................................................................. 22

2.2. Performance of contract of sales of movables........................................................... 25

2.2.1. Obligations of the seller....................................................................................... 25

2.2.1.1. Obligation to deliver................................................................................... 25

2.2.1.2. Obligation to Transfer ownership............................................................... 30

2.2.1.3. Obligation to warranty title, defects, and non – conformity..................... 30

2.2.2. Obligations of the buyer...................................................................................... 40

2.2.2.1. Obligation to pay price...............................................................................

40
2.2.2.2. Obligation to take delivery........................................................................
42
2.2.3. Common obligations of the seller and the buyer................................................ 43

2.2.3.1. Obligation to pay expenses………………………………………………. 43

2.2.3.2. Obligation to preserve the thing………………………………………… 44

2.3. Transfer of risk under contract of sales of movables................................................ 46

2.3.1. General................................................................................................................ 46

2.3.2. Special arrangement by the parties – term of shipment...................................... 48

2.4. Non - performance and its legal effects.................................................................... 50

2.4.1 Meaning of non-performance…………………………………………………... 50

2.4.2 Legal effects of non-performance…………………………………………….... 51

2.5. Remedies in case of non – performance.................................................................... 54

2.5.1 Forced Performance…………………………………………………………….. 56

2.5.2 Cancellation of contract of sale……………………………………………….... 59

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 2.5.2.1. Cancellation by Court…………………………………………………..... 60

2.5.2.2. Unilateral cancellation……………………………………………………. 63

2.5.3. Compensation………………………………………………………………….. 69

2.5.3.1. Conditions for compensation…………………………………………….. 70

2.5.3.2. Assessment of compensation……………………………………………... 73

2.6. Contracts allied to sale (various forms of contract).................................................. 76

2.6.1. Overview............................................................................................................. 76

2.6.2. Various contracts................................................................................................. 77

2.7. Contract for sales of immovable................................................................................ 90

2.7.1 General overview.................................................................................................. 90

2.7.2 Various requirements for the validity of the contract.......................................... 91

2.7.3. Performance of contract of sale of immovable……………………………….... 95

2.8. Summary……………………………………………………………………………. 98

2.9. Review questions…………………………………………………………………… 100

Chapter Three – International Sales Contract............................................................. 102

3.1. The application of CISG (Convention on International sale of Goods)

on international contracts………………………………………………………….. 102

3.2. The application of UNIDROIT principles on international contracts…………….. 104

3.3. The case for using CISG and UNIDROIT principles in Ethiopia…………………. 105

3.4. Summary…………………………………………………………………………... 110

3.5. Review questions………………………………………………………………….. 111

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PART TWO – LAW OF SECURITY DEVICES……………………………………112

Introduction to Part Two……………………………………………………………… 112

Objectives – General……………………………………………………………………113

Chapter One - General Introductory Issues………………………………………….114

Introduction to the chapter………………………………………………………. …….114

Objectives of the chapter………………………………………………………............. 114

1.1. Definition of Securities…………………………………………………………….114

1.2. Importance of securities…………………………………………………………... 115

1.3. Nature of Securities………………………………………………………………. 122

1.4. Types of Securities………………………………………………………………... 124

1.5. Summary………………………………………………………………………….. 129

1.6. Review Questions………………………………………………………………… 130

Chapter Two - Pledge (Security on Movables)………………………………………. 131

Introduction to the chapter……………………………………………………………… 131

Objectives of the chapter………………………………………………………….......... 131

2.1. Definition of Pledge……………………………………………………………… 131

2.2. Requirements for a valid creation of contract of pledge…………………………. 143

2.2.1. Formality requirements – specification of maximum claim and

written form……………………………………………………………………… 143

2.2.2. Transfer of Possession....................................................................................... 146

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2.3. Rights and Duties of the parties to the contract of pledge……………………….. 150

2.3.1. Rights and Duties of the Pledger……………………………………………... 150

I. Rights of the pledger……………………………………………………………. 151

a. Right to retain ownership…………………………………………………… 151

b. Right to take back the thing by discharging the secured obligation

at any time…………………………………………………………………... 153

II. Duties of the pledger…………………………………………………………. 154

a. Duty to deliver the thing……………………………………………………… 154

b. Duty to cover cost of preservation………………………………………….. …155

2.3.2. Rights and Duties of the Pledgee……………………………………………... 156

I. Rights of the pledge………………………………………………………….... 156

a. Right to possess the pledged property……………………………………...... 156

b. The right to collect fruit……………………………………………………….158

c. Right to be paid first (Priority Right)………………………………………….159

II. Duties of the Pledgee………………………………………………………… 161

a. The duty to preserve the thing……………………………………………....... 161

b. The duty not to use the thing…………………………………………………. 163

c. The duty to return the thing upon extinction of the secured obligation……… 164

2.4. Execution of pledge - Sale of pledge…………………………………………….. 165

2.4.1. In cases of ordinary creditors – General……………………………………... 165

2.4.2. In case the creditor is Bank – Special Protection…………………………..... 167

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 2.5. Extract for Further Reading…………………………………………………….... 168

2.6. Summary…………………………………………………………………………. 196

2.7. Review Questions………………………………………………………………... 196

Chapter Three - Mortgage (Security of Immovables)……………………….. ……..197

Introduction to the chapter……………………………………………………….. ……197

Objectives of the chapter................................................................................................ 197

3.1. Definition, subject matter, and essential features of mortgage…………………. 197

3.1.1. Definition…………………………………………………………………… 198

3.1.2 Subject matter of mortgage………………………………………………….. 199

3.1.3. The Essential Characters of Mortgage ……………………………………... 200

3.1.3.1. It is real right …………………………………………………………. 200

3.1.3.2. It is created against immovable……………………………………….. 200

3.1.3.3. It is accessory to the principal obligation ……………………………… 201

3.1.3.4. Indivisibility of mortgage………………………………………………. 203

3.2. Importance of mortgage …………………………………………………………. 205

3.3. The essential requirements for the creation and enforcement of mortgage……… 206

3.3.1. Written form………………………………………………………………….. 206

3.3.2. Registration…………………………………………………………………... 207

3.3.3. Ownership……………………………………………………………………. 208

3.3.4. Specification of the maximum claim secured by the mortgage……………… 210

3.4. Types of Mortgage……………………………………………………………….. 211

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 3.4.1. Legal Mortgage………………………………………………………………. 211

3.4.2. Judicial Mortgage…………………………………………………………….. 211

3.4.3. Contractual Mortgage………………………………………………………... 212

3.5. Effects of Mortgage……………………………………………………………… 212

3.5.1. The Relations between the Parties to Mortgage…………………………….... 213

3.5.1.1. The Rights of the Creditor (mortgagee)……………………………….. 213

3.5.1.1. (A) The Right to be paid first (priority right)………………………... 214

3.5.1.1. (B) The right to follow the property…………………………………. 217

3.5.1.2. The Rights of the Debtor (Mortgagor) on the Property after

the Creation of Mortgage…………………………………………….. 217

3.5.2. The place of third parties in the mortgage relations………………………….. 219

3.6. Extinction of mortgage…………………………………………………………… 223

3.7. Summary………………………………………………………………………….. 224

3.8. Review Questions………………………………………………………………… 224

Chapter Four - Other ‘Security Devices’......................................................................... 225

Introduction to the Chapter………………………………………………………... …….225

Objectives of the chapter…………………………………………………………………. 226

4.1. Antichresis………………………………………………………………………….. 226

4.1.1. Definition…………………………………………………………………......... 226

4.1.2. Creation………………………………………………………………………… 227

4.1.3. Distinction between antichresis and mortgage……………………………......... 227

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4.2. Affiliated Cases…………………………………………………………………….. 228

4.3. Summary…………………………………………………………………………… 229

4.4. Review Questions………………………………………………………………….. 229

References……………………………………………………………………………… 230

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