The Governance or Otherwise of Cryptocurrency in the Sales of Goods Act, 1893 BY A.I. FOWOWE - IReporteronline
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The Governance or Otherwise of Cryptocurrency in the Sales of Goods Act, 1893 BY A.I. FOWOWE

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The Governance or Otherwise of Cryptocurrency in the Sales of Goods Act, 1893

BY

A.I. FOWOWE*

INTRODUCTION

The significant evolvement of the world has not been limited to infrastructures and technology; its tentacles have also spread across areas like money and currency. Since the inception of countries gaining independence, there have been disparities as to the acceptable currency to be spent in each country. For instance, the acceptable Naira in Nigeria is not acceptable in the United States of Nigeria where Dollar is being spent. It is however on this premise and the need to find a globally acceptable currency that ‘cryptocurrency’ has evolved.

 

WHAT IS CRYPTOCURRENCY?

A cryptocurrency is a digital or virtual currency that is secured by cryptography; a method of protecting information and communications through the use of codes, so that only those for whom the information is intended can read and processes it.[1] Cryptocurrency does not exist in physical form, like the paper money, nor is it issued by a central authority. Cryptocurrencies typically uses decentralized control as opposed to centralized digital currency and central banking systems. This incredibly renders cryptocurrency immune to government interference or manipulation. The first decentralized cryptocurrency, Bitcoin, was created in 2009 by presumably pseudonymous developer Satoshi Nakamoto.[2] Ever since then, there have been numerous other currencies such as Thorium, Ripple, Litecoin, Stellar, Tron and many others.

The nature of the transaction of cryptocurrency at its initial stage involves the use of paper money for the acquisition or purchase of cryptocurrency. In other words, for individuals to purchase any cryptocurrency such as Bitcoin, Ethereum and others, such person can only do such by buying the cryptocurrency for its current price or using another cryptocurrency of the same value. For instance, if the physical paper money worth of Ethereum is N50 000, that means 1 Ethereum can be gotten for N50 000. However, that same Ethereum can be purchased with Bitcoin if it is worth the same or a higher value.

The acceptability of cryptocurrency has spanned across diverse countries such as the United States of America, the United Kingdom, Australia, Morocco, Canada, Finland, Namibia, Zimbabwe, Ghana, Mexico, South Africa and many others. Some of these countries have even gone as far as enabling cryptocurrency to be a legitimate form of payment for goods, and even services.

In light of the crux of the discussion, it is imperative to peruse the Sales of Goods Act, 1893 vis-à-vis its area of governance.

 

SALES OF GOODS ACT, 1893

The Sales of Goods Act, 1893 is an Act of the Parliament of the United Kingdom, inculcated into the laws of Nigeria via the Statues of General Application, which regulates contracts in which goods are sold and bought. The purpose of the Act is to define the rights and duties of the parties (where not expressly defined in the agreement), while specifically preserving the relevance of ordinary contractual principles.As embedded in its name, the Sales of Good Act governs solely Sales of Good Contract and other forms of contract that have been excluded from the ambit of this act. Hence, the need for the imperative need to outline the definition of a Sales of Good Contract.

A Sales of Good contract is a contract whereby the seller transfers or agrees to transfer property in goods to the buyer for a money consideration called, the price.[3] In other words, a Sale of Goods Contract is one whereby a good is exchanged for money which is the price that has been duly attached with such good. For instance, a Sale of Good Contract is a situation whereby N5 000 that has been attached to a bag as the price has been paid in exchange for such bag. Flowing from this, there can be deduced two key elements for the Sale of Goods Act to govern a transaction which are:

 

  • There has to be a good for sale.
  • Such good must be gotten for money which is the price required in getting such good.

Premised on the above established, it is safe to move on to the thrust of the question:

 

WHETHER OR NOT CRYPTOCURRENCY CAN BE GOVERNED BY THE SALE OF GOODS ACT, 1893

Assessing the earlier posited definition of Cryptocurrency, it can be easily asserted that cryptocurrency can be bought and can also be used to buy. Cryptocurrency at its inception has to be bought with the physical or paper money; it can be further used to buy things, especially in countries that have totally accepted and recognize cryptocurrency in its different sort. Controversially, the nature of cryptocurrency that allows it as a digital money to be bought and can be used to buy questions its applicability to be governed by the Sale of Goods Act, 1893 or be treated as a Sale of Good Contract.

Based on the previous establishment that the Sale of Goods Act only governs a Sale of Good Contract which involves the exchange of good for money called the price, the initial requirement of purchasing a cryptocurrency is titled towards this direction. In getting a cryptocurrency, buyers often get them in exchange for some money which can serve as the “price” of such good. This transaction is in fulfillment of Section 1(1) of the Sales of Goods Act, 1893; however, questions might arise as to whether cryptocurrency can be referred to as a good under its express definition in Section 62(1) of the Sales of Good Act, 1893 which states thus:

all chattels personal other than things in action and money… emblements, industrial corps, things that are attached to land that are agreed to be severed in a sales of Good contract.

Based on the provision of above, it is safe to categorize cryptocurrency as a good as it falls under chattel personal due to the fact that it is a digital asset that can be owned by a person.

On the other hand where cryptocurrency serves as money or consideration for a good to be bought, it can be safely asserted that cryptocurrency in its true function is only serving as money for the price of other goods. In other words, where cryptocurrency serve as money in getting goods, such transaction can still be governed by the Sale of goods Act, 1893.

 

CAN FUNGIBLE TOKENS TRANSACTIONS BE GOVERNED BY THE SALE OF GOODS ACT, 1893?

Fungible tokens in its definition are goods or asset with values which can be equally interchanged with other individual goods or assets of equally values without any opposing quality that could add or subtract the original value.  With this definition, fungible tokens can be goods where they have no quality as a tender of transaction in them; consequently, they can be governed by the Sale of Goods Act, 1893. However where a fungible token is a tender for transaction like money and cryptocurrency then the Sales of Goods Act can not apply.

 

CONCLUSION

Flowing from the discussions and establishment above, it is safe to conclude that the nature of transaction in cryptocurrency can be, with the combination of provisions, governed by the Sale of Goods Act, 1893. However, laws should be made that would expressly govern and regulate the trading of cryptocurrency.

 

Fowowe Adetomiwa is an undergraduate in Adekunle Ajasin University, Akungba-Akoko where he studies Law. He can be reached via hid mail: fowowe.adetomiwa@gmail.com

* Fowowe Adetomiwa Isaac, Faculty of Law, Adekunle Ajasin University, Akungba-Akoko, fowowe.adetomiwa@gmail.com

[1]Kathleen Richards, ‘Cryptography’, <https://www.google.com/amp/s/searchsecurity.techtarget.com/definition/cryptography%3famp=1> accessed 17 March 2021.

[2] Wikipedia, ’Cryptocurrency’, <https://en.m.wikipedia.org/wiki/Cryptocurrency> accessed 17 March 2021.

[3]Section 1(1), Sales of Goods Act, 1893.

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Nigeria’s rate of inflation dropped to 18.12 per cent in April 2021, the National Bureau of Statistics (NBS) said on Monday

It was 18.17 per cent in March, shedding 0.05 per cent to close at 18.12 in April.

The NBS said: “The Consumer Price Index, which measures inflation increased by 18.12 per cent (year-on-year) in April 2021.

“This is 0.05 per cent points lower than the rate recorded in March 2021 (18.17 per cent).”

The 0.05 per cent drop in April 2021 was the first time Nigeria’s inflation rate would fall in about 20 months as the last time it fell was in 2019 when the CPI shed 0.06 per cent, falling from 11.08 per cent in July to 11.02 in August.

In its April 2021 inflation report, the NBS stated increases were recorded in all Classification of Individual Consumption by Purpose divisions that yielded the headline index.

On a month-on-month basis, the headline index increased by 0.97 per cent in April 2021, this was a 0.59 per cent rate lower than the rate recorded in March 2021 (1.56 per cent).

The percentage change in the average composite CPI for the 12 months period ending April 2021 over the average of the CPI for the previous 12 months period was 15.04 per cent, showing 0.48 per cent point from 14.55 per cent recorded in March 2021.

The urban inflation rate increased by 18.68 per cent year-on-year in April 2021 from 18.76 per cent recorded in March 2021, while the rural inflation rate increased by 17.57 per cent in April 2021 from 17.60 per cent in March 2021.

On a month-on-month basis, the urban index rose by 0.99 per cent in April 2021, down by 0.61 the rate recorded in March 2021 (1.60 per cent).

The rural index also rose by 0.95 per cent in April 2021, down by 0.57 the rate that was recorded in March 2021(1.52 per cent).

The corresponding 12-month year-on-year average percentage change for the urban index was 15.63 per cent in April 2021.

This was higher than 15.15 per cent reported in March 2021, while the corresponding rural inflation rate in April 2021 was 14.48 per cent compared to 13.99 per cent recorded in March 2021.

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In a statement, the institute said conversations on this would be held at its two-day Annual Marketing Conference scheduled to hold later in May.

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As part of efforts towards making Edo State a preferred investment destination, the state government has facilitated a memorandum of understanding (MoU) with investors for the building of the Monee International Market in the state.

To facilitate the process, the government had earlier granted a waiver to the investor in the payment of planning fees, besides other government efforts.

The MoU was signed by members of the Board of Trustees (BOT) of Monee International Market, the developer, Alicesons Property Market Limited, and lawyers for both parties at the ESIPO office in Benin City.

The international market located on Agbor Road, Benin City is for the sales of electrical and electronic materials as well as building materials.

On completion, it will create 20,00 direct and indirect jobs for the populace and also be seen as a significant economic impetus for the development of the state.

The investor stated that it will alter the original plan of the market to increase the number of building so as to accommodate up to 2,860 stores from the original 1,290.

Speaking at the MoU signing ceremony, the Managing Director of Edo State Investment Promotion Office (ESIPO), Mr Kelvin Uwaibi assured the investor of government support towards completing the project soon.

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Chief Sam Awiaka who spoke on behalf of the BoT of Monee International Market said that the project has lingered for years.

He commended the courage and efforts of ESIPO in facilitating the project, urging stakeholders not to relent until the project completion.

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