CONTRACT LAW — Credit Sale Agreement — Ownership Passes on Contract — Remedy of Seller
Ratio Decidendi
Per Rhodes-Vivour, JSC, in Ajagbe v. Idowu (2011) NLC-123-271-2003(SC) at p. 25; Paras A—C:
"In a credit sale agreement for the purchase of a vehicle, the buyer, i.e. the plaintiff/respondent pays a deposit, followed by installmental payments. Once the agreement is entered into by the parties, ownership of the vehicle is transferred to the buyer. If the buyer defaults or is unable to meet his financial obligations to the seller, the option open to the seller is an action to recover the balance of payment owed by the buyer/purchaser."
Explanation / Scope
This principle establishes that in a credit sale agreement, ownership passes to the buyer upon entering the agreement. If the buyer defaults, the seller’s remedy is to sue for the balance of payment owed. The principle applies in credit sale transactions. It ensures that ownership is recognized. The principle reflects the nature of credit sales. It prevents sellers from seizing the chattel. The court must require the seller to sue for the balance. The principle provides guidance on credit sale agreements.